BOT TRADING SYSTEM
It seems inevitable, but somewhere, someone will post an end-of-day chart and tell you how it was a great day to trade. How at Bar x and bar y you made a killing trading. Hindsight is great, albeit when your live and going bar-to-bar the market is a different animal.
Look at the range of the opening bar: intra-bar swings as much as four points. If you shorted the first PB at B3, B4-6 most likely took many out and produced a holding loss. If you shorted B8, B9-11 went against you. EMA long/short did not fair any better. You took scalps to two points if lucky, or BE on reversal bars. The first clear entry was the two bar doji (two bars that negate one another acting like a single bar doji) short at B11-12 and again at B19-20.
That brings us to establishing and following your rules. The trend at the open was a bear channel, range run. The BOT rules look for and expect a range run if the BOT extremes fail. It would say hold for the range run to complete, which it did on B1 and 2. Being range bound yesterday and PA suggesting Friday would be the sane, the US play would be to long the SB FBO. PA was bullish until the upper TL of the bear channel, and the Middle BOT which was the same value as yesterday's LB. Reasons to look for a stall in PA and short with the channel trend. Again, that opportunity was at the two bar doji.
PA followed the channel until B25-26 when the second buy support was hit. The first was at Y-SB. B25-26 is also a reversal pattern, the "L" variety. By B40 we have a supporting bullish TL as PA reverses the range, with a reversal (r variety) at B59-60 that tested the LOD once more when buyers again jumped in for the final range run of the day.
The reversal patterns that are likely to work look like certain letters. For bull reversals (at a low) look for a J or L pattern. At the tops, look for a 7 or r pattern.
Hindsight: it was a great day. Rules: it was a great day, and makes the DOING easier by removing the emotion of the trade. Was it easy? No, but certainly easier than the fear that came in when PA danced 2-4 points before completing the ranges. By B25 we were more settled, and back to normal, if any market can be deemed normal.
Great article CM!
ReplyDeleteSpecially saying Friday would be (the) saNe. And it was! Would have loved the bar numbers in it. Well, just went to BPA and printed that chart.
Introducing four more pattern names: J, L, 7 and r. Don't see yet what that would bring.
Still not clear how you decern the BOT's. They are not the same as 'pivots' are they?
Meet ya in #chartmaster
Added another post this evening to illustrate the "letter" bar patterns. The pattern is two bars for a doji, an "L", etc.
DeleteThe BOT calculator has not been released, but values are provided in the chat for now. You are correct, they are not pivots but an "estimator" (which has been very good!) where the bull buy pressure will exceed the bear selling(the LB Long Breakout Target) and where bear selling should exceed bull buyers (the SB Short Breakout Target). A BO is expected to run for a minimum of 5 points. There is also rules for a FBO, reversals, and range runs.