SBV Technical Analysis - Trading Volume with Confidence
Simple SBV Trading System Blog
S&P 500 Chart Trading
Friday, July 24, 2009
This week SBV chart example is based on the 60-day SBV(20) S&P 500 chart.
+11% on the last rally up
Chart 1. Relationship between the SBV oscillator and index reversal points. S&P 500 index. 60-day view. 1 bar = 1 hour. SBV(20)
It's Simple and profitable
In our trading example, we applied the following simple system which is based on our SBV indicator:
Once the SBV indicator declines below negative signal level (the indicator will now show red), we enter a short position (if we are not already short);
Once the SBV indicator advances above negative signal level (after having been below that level), we will enter a long position (the indicator still shows red);
Once the SBV indicator rallies above positive signal level (the indicator will now show green), we enter a long position (if we are not already long);
Once the SBV indicator declines below positive signal level(after having been above that level), we will enter a short position (the indicator still shows green);
Additional Stop Loss Rule -If the SBV dropped into negative territory and started to rise without hitting the signal line, close the short position when the SBV is back in the positive territory, and stay in cash until a new buy signal is generated. Vise versa for a long position.
Detailed system description with explanation of used rules could be found in our "SBV Trading System" tutorial.
Table 1: Trades based on the 5-rule system.
Time
Motivation
Signal
Index
Profit (points)
6/02/2009
rule #4
Sell Short
933
-9
6/04/2009
rule #5
Cash
942
6/11/2009
rule #4
Sell Short
945
+27
6/18/2009
rule #2
Buy
918
0
6/18/2009
rule #5
Cash
918
6/24/2009
rule #2
Buy
906
+10
6/26/2009
rule #4
Sell Short
916
-9
6/29/2009
rule #3
Buy
925
-8
6/30/2009
rule #4
Sell Short
917
-2
6/30/2009
rule #5
Cash
919
7/10/2009
rule #2
Buy
879
+100
Total:
+109 (+11.7%)
Note: The 20% level for the SBV indicator was determined in relation to the prevailing market conditions at the time the trading examples were selected. In order to establish the optimal critical levels for the SBV indicator, traders should consider the current market situation and review a chart history of prior volume surges including their magnitude (i.e., the level the SBV indicator reached).
Our charts are unique in that they give traders the option to choose specific chart settings that best fit their personal trading styles and risk tolerance. Traders can thus develop and test their own trading systems. On our charts, you can scroll back in history to test any system you created.
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.
