S&P 500 and SPY trading

+69 points on the S&P 500

1 point on S&P 500 = $50 on 1 SP E-mini contract
10 point on S&P 500 = $1 on 1 SPY stock
10 points on S&P 500 is about 10-15% on SPY options

This week SBV chart example is based on the 15-day SBV(16) S&P 500 chart.

Chart 1. Relationship between the SBV oscillator and index reversal points. S&P 500 index. 15-day view. 1 bar = 15 min. SBV(16)

It's Simple and profitable

In our trading example, we applied the following simple system which is based on our SBV indicator:

1. Once the SBV indicator declines below minus 33% (the indicator will now show green), we enter a short position (if we are not already short);
2. Once the SBV indicator advances above minus 33% (after having been below that level), we will enter a long position (the indicator still shows green);
3. Once the SBV indicator rallies above plus 33% (the indicator will now show red), we enter a long position (if we are not already long);
4. Once the SBV indicator declines below plus 33% (after having been above that level), we will enter a short position (the indicator still shows red);
5. 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.

Table 1: Trades based on the 5-rule (additional stop-loss rule) system.

Note: The 33% 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.

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