Market Breadth Data******************************

OddsTrader Trading Strategies

OddsTrader not only empowers users with an unmatched ability to pick price and time targets, support/resistance and overbought/oversold levels (see point 10 below), but it also gives them the option to to implement several different trading strategies.

Version 2.9. introduces dual time-frame scanning (daily & weekly) making it easier to initiate trades when both the daily and weekly indicators point in the same direction.

In version 2.3, setups 1 & 2 are paired with a pattern recognition algorithm to produce visible signals within the app.

In Version 2.7 the trading signals generated by combining the two setups (thick green/red line) are now reported as Combo Signals in Data Tab. Please note that the long/short entry dates and prices reflect when a new signal in the opposite direction is generated and do not necessarily coincide with the end of the green/red line. Breaks in the line indicate loss of momentum, and should normally be interpreted as an early warning to tighten stop/loss levels.

The first strategy combines elements of pattern recognition and trend trading, while the second is more suited for swing trading. The two strategies can never generate opposing signals.

As explained in the User Guide, the signals are generated for informational purposes only, and should not be followed blindly. The pattern recognition algorithm is live during the trading day and the signal generated earlier in the day may get cancelled (never reversed) if market conditions change.

If you want to make sure the signal doesn't change after you make a trade, you'll need to wait until the close. The drawback is that sometimes you'll miss a big intraday move.

If you feel lucky, you don't need to wait for pattern confirmation. Sometimes you'll be better off, sometimes -- not. There's no right answer, although keeping an eye on market breadth during the day will increase your odds of making the correct decision. The signals illustrate just one possible solution out of many.

Here are a few examples.

1) Buy/sell setup when price reaches/penetrates the top/bottom channel. As mentioned by Hurst, the best and most profitable trades result from buying on pull-backs within an uptrending channel, and selling on strength within a downtrending channel.
Hint: you can use the channel values from Data Tab to create alerts with My Portfolio's alert tool, and to receive e-mail notifications whenever price reaches a predetermined price level.

2) Buy/sell setup when the R/R Oscillator becomes oversold (< .15) or overbought (> .85). In Data Tab .85 will be rendered as 85%.

3) Buy/Sell setup when both channels converge and reverse in the same direction.

4) Buy/Sell setup when price crosses above/below the Pivot Line or use it as a stop/loss. Data Tab conveniently displays the pivot level for the next day, as well as the price difference between the close and the pivot (C-P).

5) Initiate a long/short trade only when the potential reward is at least two times bigger than your predetermined stop/loss level i.e. when the long r/r in Data Tab is more than twice as big as the short r/r, and vice versa.

6) Use the Cycle tool to time your long/short entries.

7) Use the Avg. Swing tool to set realistic trading targets. If the upswing is 5 points, and the downswing 3 points, Avg. Swing = 4 points.

8) Use the Volatility data to discover mispriced options.

9) Use OddsTrader as a confirmation tool/filter for all your other trading strategies.

10) And last, but not least, use OddsTrader to figure out price and time targets and support/resistance levels. OddsTrader's ability to do that way better than any Wall Street analyst is well documented and you can read more about it here, here, here, and here.

Terms of Use

All rights reserved by the author. The material contained herein is original content and is the sole property of the author. Any commercial use or reproduction - either in part or whole - is strictly forbidden without the author's prior consent.

Disclaimer: The information provided here is for educational purposes only and does not constitute trading advice nor an invitation to buy or sell securities. The views are the personal views of the author. Before acting on any of the ideas expressed, the reader should seek professional advice to determine the suitability in view of his or her personal circumstances.