Indicators are liars! Support and Resistance Trading for the S&P emini

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Quote from bbqbbq:

a 1 min candle closed above the bollinger band?
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Exactly...The theory behind BBs using 2 standard deviations is that 95% of price action is contained within the Bands. That 5% that moves out of the bands is at an "extreme" and that move is unlikely to be sustained. Utimately resulting in price reverting back towards the mean. (The 20MA) This is called mean reversion.

I use this and also a 1 min $TICK chart with BBs, Also looking for extremes here.

My thread is about indicators being Liars and how people that excessively and wrongly use indicators are destined to lose. S/R is the CORE of my method. If the $TICK and the 1min BB are at extremes at these levels this is my confirmation/ set up.

I only take trades close to the S/R levels I talk about (thus limiting my trades to areas where the probability of success is high. With extremes on the BBs and the $TICK I fine tune my entry.

I wanted to break things down for everyone with diagrams and examples, but this is the core of what I do.

Its very simple and very visual.

we've had many messages today so I am re attaching the levels for anyone who may have missed them
 

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Quote from ESResistance:

Exactly...The theory behind BBs using 2 standard deviations is that 95% of price action is contained within the Bands. That 5% that moves out of the bands is at an "extreme" and that move is unlikely to be sustained. Utimately resulting in price reverting back towards the mean. (The 20MA) This is called mean reversion.

I use this and also a 1 min $TICK chart with BBs, Also looking for extremes here.

My thread is about indicators being Liars and how people that excessively and wrongly use indicators are destined to lose. S/R is the CORE of my method. If the $TICK and the 1min BB are at extremes at these levels this is my confirmation/ set up.

I only take trades close to the S/R levels I talk about (thus limiting my trades to areas where the probability of success is high. With extremes on the BBs and the $TICK I fine tune my entry.

I wanted to break things down for everyone with diagrams and examples, but this is the core of what I do.

Its very simple and very visual.

we've had many messages today so I am re attaching the levels for anyone who may have missed them
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isee, very interesting! the BB uses a standard 20 MA, but i was using a 20 Exponential MA earlier.. do you prefer any or just use both?

I've never considered using tick charts, my smallest is 1 min chart, are tick charts useful for the average beginner?

Thanks for the clarification of your set-up! :D i'm looking forward to trading your levels regularly but I should probably also learn to make them myself:p
 
Quote from bbqbbq:

isee, very interesting! the BB uses a standard 20 MA, but i was using a 20 Exponential MA earlier.. do you prefer any or just use both?

I've never considered using tick charts, my smallest is 1 min chart, are tick charts useful for the average beginner?

Thanks for the clarification of your set-up! :D i'm looking forward to trading your levels regularly but I should probably also learn to make them myself:p
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Not tick chart

The $TICK is an index

TICK - Represents the number of stocks ticking up minus the number of stocks ticking down. For example, if the Tick reads +200, then 200 more stocks are ticking up than are ticking down. If the Tick should read -354, then we understand that 354 more stocks are ticking down than are ticking up.

This last hit on 80.75 was a perfect example at 12.44

We had a s/r level, $tick extreme and a price extreme.
 
Quote from ESResistance:

Not tick chart

The $TICK is an index

TICK - Represents the number of stocks ticking up minus the number of stocks ticking down. For example, if the Tick reads +200, then 200 more stocks are ticking up than are ticking down. If the Tick should read -354, then we understand that 354 more stocks are ticking down than are ticking up.

This last hit on 80.75 was a perfect example at 12.44

We had a s/r level, $tick extreme and a price extreme.
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Very interesting, will check out to see if I can find $tick too :)
Didn't take advantage though of the last retest, price didn't went to 81 so didn't get filled, saw the BB indeed acting again like you said :) also saw that 64.25 wasn't as effective the first time.. so I understand you can't win every trade, thanks for your explanation, it's really helpful!
 
Quote from bbqbbq:

Very interesting, will check out to see if I can find $tick too :)
Didn't take advantage though of the last retest, price didn't went to 81 so didn't get filled, saw the BB indeed acting again like you said :) also saw that 64.25 wasn't as effective the first time.. so I understand you can't win every trade, thanks for your explanation, it's really helpful!
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No problem, my method is very visual and I believe simple.

Sure sometimes you will lose on a trade, like any method! Thats why you try to keep your risk to reward as high as possible.

1:2 risk:reward minimum

EDIT: oh and bbq the $tick is a very important part of how i trade in market hours, so do try to get it. its really helpful
 
Quote from ESResistance:

No problem, my method is very visual and I believe simple.

Sure sometimes you will lose on a trade, like any method! Thats why you try to keep your risk to reward as high as possible.

1:2 risk:reward minimum

EDIT: oh and bbq the $tick is a very important part of how i trade in market hours, so do try to get it. its really helpful
More...

yep got the tick chart :)

i looked at 12:44, and saw a spike above my 20/2 BB at 12:43.. does that matter alot?, the 12:44 bar was just below the upper line of the BB

right now just checking out how things with BB works and so, I noticed a third restest of 80.75 at 13:04, i looked at $tick and saw spike at 13:03.. the $tick is the holy grail? :p
also a spike at 13:23 around the 76 level.. and now price is down at 75!

wow

Quote from mintaka:

Here is a site that I use for some additional numbers on my daily worksheet, http://pitrading.com/volatility_bands.htm the

site uses yahoo finance data, so for indexes you need that symbol format i.e. on yahoo finance the SPX cash index is ^GSPC,
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tnx mintaka another thing to look at. those are implied levels right, but not price levels.. they might not work as well I think
 
Quote from ESResistance:

No problem, my method is very visual and I believe simple.

Sure sometimes you will lose on a trade, like any method! Thats why you try to keep your risk to reward as high as possible.

1:2 risk:reward minimum

EDIT: oh and bbq the $tick is a very important part of how i trade in market hours, so do try to get it. its really helpful
More...

saw the play at 14:16... very nice .. but I'm almost having dinner and didn't wanted to start eating with bad feeling :p
 
The numbers from that site are derived from the implied volatility of the at the money options. the formula uses the implied volatililty to calculate standard deviation ranges from the previous close. Just like on Es's worksheet he has pivots, Value area high low etc.. numbers, to add some confluence to his price derived numbers.

Es has a great post going here, and a great worksheet, i trade in a very similar fashion, I have a daily worksheet that i construct using higher time frame price and volume at price leves, and trade price patterns in conjunction with orderflow and breadth. I have found those volatility bands to be a great additon when constructing zones to trade against.

If you do a web search on voltility bands i'm sure you can find some more nformation.

That site I posted is a free easy site to use, if you want to add some additional numbers.
 
Quote from bbqbbq:

saw the play at 14:16... very nice ..
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Most of the plays are very clear like that.

You know exactly where in the market you want to enter using the S/R levels...

The set ups as described earlier help you pinpoint your entry and determine whether the level will work or not.
 
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