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SBV Technical Analysis - Trading Volume with Confidence

Emini Chart Example



April 23, 2007

More than 3 points on the Russell 2000 e-mini in a single session

We used the following simple four-rule trading system based on our SBV indicator:

  1. Once the SBV indicator has advanced above plus 30% (the SBV indicator will show red), wait for it to decline below that level, then enter a short position;
  2. Once the SBV indicator has dropped below minus 30% (the SBV indicator will now show green), wait for it to rally above that level, then enter a long position;

    It is very important to use a stop-loss strategy – particularly for intraday trades. In our system, we applied the following rules to recognize when a false signal occurred (and thus to cut our losses short):
     

  3. If we are presently in a long position and prices start to decline, we will take a loss once the SBV indicator has dropped below minus 30%. This rule may also be used to open initiate a new short position;
     
  4. If we are currently in a short position and prices start to advance, we will take a loss once the SBV indicator has advanced above plus 30%. This rule may also be used to initiate a new long position.

    We have added the following rules to protect profits and cut losses:
  5. Exit positions by the end of the session.

A number of additional rules could be added to the system depending on personal trading style and risk tolerance, and we strongly believe that any system should be adjusted to a trader''s personal trading needs.

Chart 1: Trading the SBV indicator by using 4-rule system.
Russell 2000 E-mini. 1-day view. VMA1 = 15-min

TimeTrade
Motivations
IndexDecisionTimeTrade
Motivations
DecisionIndexProfit
(points)
10:10Rule #1833.80Sell Short10:42Rule #2Buy to Cover830.20+3.60

Total:   

+3.60

Important: The 30% trigger level for the SBV indicator was determined in relation to the prevailing market conditions at the time the examples above were selected. In order to establish the optimal critical levels for the SBV indicator, profit target and stop-loss level a trader should consider his/her personal trading style and risk tolerance as well as review the current market situation and scroll a chart history of prior volume surges including their magnitude (i.e., the level the SBV indicator reached).

Disclaimer: The chart example is intended for educational purposes only - it does not constitute trading advice, nor does it make or imply any market trend predictions.

More Examples:

DateTitle
April 23, 2007 SBV Indicator Example for the Russell 2000 E-mini.
April 17, 2007 SBV Indicator Example for the S&P 500 E-mini.
February 02, 2007 SBV Indicator Example for the S&P 500 E-mini.
January 23, 2007 SBV Indicator Example for the Russell 2000 E-mini.
December 19, 2006 SBV Indicator Example for the S&P 500 E-mini on december 19 of 2006 - simple trading system
December 11, 2006 SBV Example for the S&P 500 E-mini on december 11of 2006 - using selling and buying volume to trade emini
November 29, 2006 Russell 2000 E-mini SBV trading.
August 11, 2006 SBV Indicator Example for the S&P 500 E-mini.
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