This is an educational post, one of the easy to understand short
sub systems for both the ES and SPY systems is the 60 Stochastic
Short. It's an easy trade to understand and visual, it occurs
when a 60 length Stochastic (which is a trending length), has been
riding over 80%, then dips below 80% and comes back to kiss the
underside of 80% but can't break above it, visually it's like a
wave crashing into a ceiling. This trade type has been used
on the SPY and ES systems for years, I've attached an image of a
trade from the SPY system in 2012 where this condition
occurred.
However today this condition set up on a 3 min time frame, I
didn't see it at the time so I'm posting it as an example, however
you can see how it would have provided a great day trade
short. You also had a small wedge in place and a trigger
candle.
anyway simply posting this as an educational tool that you can
also use on any time frame and something to be on the lookout for.
I have used the 60 Stochastic length for years, I think I'm
the one who pioneered it as I have not seen any other source or
book use it
by the way, here's a current chart of SPY with the 60 Stochastic
indicator, if the market were to have a small bounce higher notice
that the 60 Stochastic short condition could set up: it was
trending above 80% and fell below, it would need to push a little
higher and not cross over 80%, then reverse. Anyway in order
for this condition to setup the Stochastc would need to get closer
to 80% then reverse, however it's something to monitor this week
should that happen
If the condition were to setup, it's possible for the SPY sub
system for this to enter a short, while of course the RSI 40 module
is long
yes - think of each sub system as a separate entity or system.
So if that system happens to go short while the main one is
still long I'll let you know, it could be used like a stop sort of
for the current long. If one was trading the individual
systems, the way it would work: you would be long based on the
first sub system, then if one of the other systems went short, you
would sell the commensurate position of the current long, then once
the short system covered you would go back long the shares you had
sold. it's pretty cool stuff
Educational example of 60 Stochastic short signal
Posted by matt on 19th of Sep 2016 at 03:43 pm
This is an educational post, one of the easy to understand short sub systems for both the ES and SPY systems is the 60 Stochastic Short. It's an easy trade to understand and visual, it occurs when a 60 length Stochastic (which is a trending length), has been riding over 80%, then dips below 80% and comes back to kiss the underside of 80% but can't break above it, visually it's like a wave crashing into a ceiling. This trade type has been used on the SPY and ES systems for years, I've attached an image of a trade from the SPY system in 2012 where this condition occurred.
However today this condition set up on a 3 min time frame, I didn't see it at the time so I'm posting it as an example, however you can see how it would have provided a great day trade short. You also had a small wedge in place and a trigger candle.
anyway simply posting this as an educational tool that you can also use on any time frame and something to be on the lookout for. I have used the 60 Stochastic length for years, I think I'm the one who pioneered it as I have not seen any other source or book use it
by the way, here's a
Posted by matt on 19th of Sep 2016 at 03:49 pm
by the way, here's a current chart of SPY with the 60 Stochastic indicator, if the market were to have a small bounce higher notice that the 60 Stochastic short condition could set up: it was trending above 80% and fell below, it would need to push a little higher and not cross over 80%, then reverse. Anyway in order for this condition to setup the Stochastc would need to get closer to 80% then reverse, however it's something to monitor this week should that happen
If the condition were to setup, it's possible for the SPY sub system for this to enter a short, while of course the RSI 40 module is long
So interesting! Thanks Matt. And
Posted by sschulman on 19th of Sep 2016 at 03:55 pm
So interesting! Thanks Matt. And both subsystems can still end up being profitable because they'll have different exit times. I love this stuff.
yes - think of each
Posted by matt on 19th of Sep 2016 at 03:58 pm
yes - think of each sub system as a separate entity or system. So if that system happens to go short while the main one is still long I'll let you know, it could be used like a stop sort of for the current long. If one was trading the individual systems, the way it would work: you would be long based on the first sub system, then if one of the other systems went short, you would sell the commensurate position of the current long, then once the short system covered you would go back long the shares you had sold. it's pretty cool stuff
guys I posted an educational
Posted by matt on 19th of Sep 2016 at 03:44 pm
guys I posted an educational example as sticky at the top