Wednesday, February 25, 2015

Its been awhile!

Its been a little over a year since my last post.  After reviewing my previous posts I realized that I was just saying the same thing over and over again an began to annoy myself.  My ability to define support and resistance areas using Point and Figure charts is awesome if I do say so myself. However, buying and selling resistance was always tricky because I always wondered would a that support or resistance area break the minute I execute the trade. So I decided to read books on the psychology of trading.  Specifically the expectations of traders at major price inflection points.  That knowledge allowed me to develop a system of trading that I believe has potential so long as one adheres to the rules.  This is a short term SPY trading system using a 15 min chart and the signals that I've developed using thinkScript.  I'll use this forum to post the chart daily and keep myself honest as to the trades I execute and the success of those trades.

The rules are pretty simply buy at support sell at resistance only when you get a signal.  A valid signal is one where two bar consecutive 15min bar have an arrow in the same direction.  The stop is the low of the 15min bar the trade was execute it.  Simple no?   The key however, is uncovering these significant levels of support and resistance ahead of time.  Below is an example of a 15 min chart for the past two days.

You can see we got a great sell signal (two consecutive down arrows) right at resistance of $211.86 with an exit at $211.20.  Keep in mind that I ideally would like to see the distance between support and resistance of $1 or more.  Since we are hitting new record highs each day these support and resistance lines I would consider to be minor until they become more significant.

Today we saw two buy signals.  The was two far from my support level to execute.  However, the second signal was at support so was playable.

So there you have it.  On average there is at least one to two signals a day so there is plenty of opportunity everyday.  I totally expect plenty of losers but also plenty of winners.  I figure if I just stick to the rules and I'm sure it will work out.

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