GENERAL SM
SM stands for SLOT MACHINE. When the colors on one line all "line up the same" it pays off just like a slot machine. I use 4 simple moving averages to determine the trend. Usually, when the moving averages are heading up (+) and the price is above them (green) you can go long and make money.
The MA(40) acts like a directional indicator - go long when green and short when red if the other indicators confirm.
The SLOT MACHINE SORT indicator allows you to sort the frequencies correctly. If you sort on INTERVAL, it doesn't sort correctly because it's text.
Start out with ONE indicator, like the TREND indicator. Learn how it displays the "waves" of changing trends. The goal is to make money, not to learn every indicator. I use a handful of indicators. I just write the other indicators because I can. People like different indicators. So I help. I also learn new stuff in the process. I really like the TRI on the 15 minute chart. Works well with the GRIDIRON.
And for stock selecting NOTHING beats RSI(2) especially when there's a divergence. RSI(2) works great for trading too on the 15 minute and 60 minute charts.
For selecting stocks, use the SMAA_COMPASS on daily and 60 minute intervals along with the SMAA_DIVERGENCE indicator.
For trading, use the SM_TREND indicator along with the GRIDIRON CHART INDICATOR so you'll have the support/resistance lines.
You may also want to use the $.SMAA_PRICE_VOLUME_TR Indicator.
Of course, use them on MULTIPLE INTERVALS: 1/5/15/60 minutes.
------
For swing traders, use daily and 60 minute charts/radar.
When you see RSI(2) < 1 on the daily and/or 60 minute chart it is time to LOAD THE BOAT - UNLESS the EMA(13) crossed below the EMA(26).
MISCELLANEOUS
- I have been using the GRIDIRON for all of my trades including FOREX.
- Quick scalps are all about the entry/exit. Once you spot an entry, you get in and get out before it reverses on you. If you concern yourself with "money left on the table" when you are scalping, you are bound to get whacked bigtime! Better to focus on making your pile grow with each trade.
- I have my 3-candle rule. If I am in a long trade and the current candle is the third consecutive green candle and the price stalls, I exit immediately unless the EMA(5) is at a 45 degree angle.
- The main tools to use are the GRIDIRON, the COMPASS, and the new TREND ENDER and MULTI TOOL indicators.
TRADING Q/A
BASIC STRATEGY: TREND & COMPASS
Q: Reading through the posts, I was very impressed by the work presented here, however, I thought that maybe I can test this out by changing the code to a "strategy" just to see if I can see actual historical performance. Figuring, why sit there all day & watch colors, if once can just code this into an automated strategy! It seems simple enough to take different MA's and confirm with higher interval RSI. I basically took the code from the indicator SM_TREND and combined with the code from SM_COMPASS (Coding only the RSI on 60_Min & Daily on Data2 & Data3). I believe I have the logic correct as I simply copied over codes from the existing codes and set up entries as follows:
- All MA's +
- Closes above MA's
- RSI confirmation on 60 Min. and Daily
- Exit if any of the above conditions turn
(Tested this on Longs only, not accounting for commissions or slippage)
The equity curve on 16000 Bars is straight down on 5,10,15,20,30 minute bars!
I wonder if there is something I am missing here? Or is it that this methodology does not work?
A: Using the SM_TREND, the 60 minute entry (or 15 minute) is:
If Previous candle RED, BUY stop at previous candle close + 0.01.
If Previous candle GREEN, SELL short stop at previous candle close - 0.01.
The MA entry is:
When close crosses above MA(5) and close above MA(40) go LONG.
When close crosses below MA(5) and close below MA(40) go SHORT.
See how those strategies work on GOOG, AAPL and RIMM.
The SLOT MACHINE COMPASS is for mainly for swing trades.
Simple strategy:
When EMA(13) above EMA(26):
If Close crosses above EMA(5) then entry next day is buy stop at previous close + 0.10.
Exit when close crosses below EMA(5).
RSI(2) strategy:
If RSI(2) < 1 then entry next day is buy stop at previous close + 0.10.
Exit when close below previous close
or close crosses below EMA(5)
or close above upper Bollinger Band(20,2) and close below open.
Q: Thank you, it seems that may be I did not understand the logic correctly as I was under the impression that you use COMPASS (60 min & daily RSI for instance) to qualify the trade and enter long once the MA's all turn positive and vise versa.
A: Think about it - by the time all the MA's turn positive, you have missed most of the run!
SCREENING / ENTRIES
Q: I'm trying to break down a swing trading system (positions closed the next day or so). If you have the time, what do you suggest for the following points?
1) Putting together a likely basket of symbols for the next session. Do you just grab a random group and start refining it as you trade, or do you suggest some sort of daily screen (I also use stockfetcher for fast aftermarket screens)?
A: I use to choose my stocks. Yes, I do have an automated method. I run the AutoAvery filters I have developed for stockfetcher then I load them into the SLOT MACHINE COMPASS WORKSPACE, a Yahoo! Watchlist, and a watchlist. More than enough info! If you go to you will see all of my posts and the free filters I have left for all to use. Use the filters I have posted on StockFetcher to screen for stocks. Just search the SF forum for therumpledone.
If you tell me the dollar range you prefer to trade in, I can post a filter for you. You probably know, I love to bottom fish using RSI(2) < 1.
2) With your Slot Machine LAST, should I then focus on the 60 min interval with a reference to the compass for actual entries?
A: Use the SLOT MACHINE COMPASS AND SLOT MACHINE DIVERGENCE INDICATORS ON A 60-MINUTE FREQUENCY TO PINPOINT YOUR SHORT/LONG ENTRIES:
For LONG entry:
RSI(2) < 1 (stock bottoming out) or
+Cx5 (safe entry) or
+13x26 (trend reversal to the upside) or
Positive Divergence (lower price making higher RSI(2).
For SHORT entry:
RSI(2) > 1 (stock topping out) or
-Cx5 (safe entry) or
-13x26 (trend reversal) or
Negative Divergence (higher price making lower RSI(2).
Some of my current favorite stocks to track are: FORD, ABLE, VEXP, BOOM, SBAC, and ANTP. Just wait patiently for them to bottom on RSI(2) on either the 60 minute or daily interval. Then get ready to load the boat.
PRICE/VOLUME
Q: How are you using price and volume to pick the right stocks? Please, can you give a brief description?
A: Right stocks? No such thing! IT'S NOT THE STOCK, IT'S HOW YOU TRADE IT. I had 2 picks for today, outside of the usual suspects: WPTE and DWRI. If all you did was buy them both at the open and use some money management, you would have made a nice profit off WPTE and a few pennies off DWRI unless you waited all day.
How did I pick them? Look at the price and look at the volume and tell me what YOU see. HINT: Volume precedes price. Success always leaves clues. Look at VWPT starting on 8/18/2005. Going down, daily volume increasing, hits bottom, volume up over 400%, next day 50% volume increase over that, paid about 30% from low to high.
CANDLE INDICATOR USE
Q: I have been going over your Previous Candle strategy on the 2% thread forum and I’m not sure I understand how the Radarscreen indicator EL matches the general concept outlined in the thread.
If I understand it correctly, I assume you take a 15 min chart of RIMM (for example) and then look at the previous bar color (1 bar back) to the present bar. If that previous bar is a red candle (close lower than open), then we look to enter buy long, if previous bar close + 0.01 is exceeded to the upside on the current or on a near future bar.
If that is the correct strategy, then I am confused by the setup of the Radarscreen CANDLE indicator. If the PREV column candle is red (previous candle close lower than previous candle open), then I am looking to enter buy long on present bar if it goes higher than previous candle close +0.01, but the color of the Candle column bar (present bar) seems to be dependent on the close of present bar minus the close of previous bar according to your EL code:
IF xDiff >= .01
THEN BEGIN
Plot2( xDiff, "CANDLE", BLACK );
SetPlotBGColor( 2, green );
END;
where:
xDiff = xClose0 - xClose1;
My point is, since I am looking for previous bar (red candle) close to be exceeded to upside by >0.01 to enter buy long, the color of (present candle) Candle column bar is less important and (even maybe even misleading) than comparing present price (last column) to previous column price + 0.01 (if going long)
How do I read the RadarCandle indicator to know when to enter the trade? That is my question.
A: The SLOT MACHINE CANDLE INDICATOR candle column is based on the previous candle's closing price. It tells, in cents, how much the current price is above/below the previous candle's close. Perhaps the name CANDLE is throwing you off? You could rename the column DIFFERENCE.
You enter LONG when you see the value of CANDLE equal 0.01, if the previous candle was RED.
You enter SHORT when you see the value of CANDLE equal -0.01, if the previous candle was GREEN.
The CANDLE column will have a background of YELLOW when you need to "on your toes" for an entry.
You have to be quick. Sometimes you only get a second or 2 to take profit. Don't be greedy. And take every trade or you will be sure to miss the big one! If you use the SLOT MACHINE CANDLE INDICATOR along with the SLOT MACHINE BATTLELINES INDICATOR - you'll know when to exit.
TRADING PLAN
3 - Short term trend: on 1 min row look at compass and trend indicator
6 - ROC: Look for 0 cross and/or Positive/Negative Divergence
7 - Look at the candle indicator should NOT be a 3!!
9 - Look at SM candle - if lower highs then price stalled
10 - Look at the candle counter or look at the chart.
20 - Look at gridiron trade indicator... yellow TRADE
21 - Look at gridiron trade indicator... yellow TRADE
Q: Does RS Previous Candle Close +/- 0.01 actually display the calculated amount of the previous bar close +/- 0.01?
A: The Candle column of the SM Candle indicator tells you how much the price is up/down from the previous candle close.
When do I exit the trade Using 1 Minute?
1) Price stalls: EMA diff threshold should be exceeded
2) 3 consecutive candles of same color: EMA slope must be flat or not in direction of trade
You have to constantly ask/answer the questions and then pick the appropriate "play".
Simple "play" to make money:
Look at the 60 minute EMA(5), if trend is up then go long when price crosses above the EMA(5) and look to exit at a gridiron line. You can stay long, if you wish, as long as the EMA(5) trends higher and the close stays above the EMA(5). GOOG and RIMM love the 60 min EMA(5).
Q: Excel Trading Plan - Which Direction Do I trade? A: 15 Minutes
Q: Previous candle color: Current = Green, Previous = Red. You pass on long and wait for Current to turn Red to go Short?
A. If Previous = RED then at the close you look to go LONG unless the ema(5) tells you otherwise meaning if the ema(5) is trending down, do not trade against the trend. But if the ema(5) is flat or up, then you can go long.
STOCK SELECTION SETUP
This is my latest workspace for STOCK SELECTION. When you see all 4 lines at the bottom of the NORMALZER chart it is time to LOAD THE BOAT.
Ind1 is RSI(2) - BLUE.
Ind2 is Accumulation Distribution - RED.
Ind3 is Momentum(10) - GREEN.
Ind4 is %R - MAGENTA.
These settings are from Mike Parker's RSIWLR ANALYZER.
In the SLOT MACHINE radar, if an indicator has POSITIVE DIVERGENCE it is dark blue on white. To make it easy on everybody, I uploaded the workspace and the indicators used.
GENERAL SM USE
Q: Would it be possible for you to share some of your SM trading indicators with us?
A: I already have!!
The SLOT MACHINE MOVING AVERAGE CROSSOVER is one.
The SLOT MACHINE COMPASS is another.
And the TREND INDICATOR, the first I posted, is another.
I have others that flash LONG, SHORT, BUY, SELL, but I hesitate to post those only because I use them on stocks that I have been tracking for over a year. But even those are based on the basics: trend, crossovers and extremes.
The whole idea behind the SLOT MACHINE is to build your own based on what indicators you normally watch on a chart. For example, if you usually go long when the price crosses above the MA(5) and sell when the price closes below for 2 bars in a row, then you can use the trend indicator as your trigger. Or if you would go long when the MA(5) crosses above the MA(10) and go short when the MA(5) crosses below the MA(10), then you can use the SLOT MACHINE CROSSOVER INDICATOR. And then you can combine the two. Enter long when the price crosses over the MA(5), stay in the trade so long as the ma(10) is trending up and exit when the MA(10) goes flat or the MA(5) crosses below the MA(10). There are many combinations. Find what works for you!
One thing to remember, you can always sell 1/2 your position and let the rest ride. I know how frustrating it is to enter a trade, take profit because of an indicator turning against me only to see the stock take off without me. I have learned to sell 1/2 my position, book the profit, and either sell for breakeven or a higher gain than the first half. Thanks to my good buddy, WildSuper.
Remember, the real power of the SLOT MACHINE is using it on MULTIPLE FREQUENCIES so you can see what is happening quickly. Once you get used to watching the SLOT MACHINE, it is like watching the waves - you see the crest and you see the fall. Once you get in sync, you'll know exactly what to do.
If all you did was use the TREND indicator and the COMPASS indicator, I think you will see your portfolio value increase. Use the 60 minute and daily radar and trade in the direction the compass tells you. The safest trade is to enter long on a +Cx5 and short on a -Cx5. (COMPASS) Just check the TREND to make sure it's flat or up for long, down for short. It's that simple.
QUICK DEFINITIONS
The SLOTMACHINE PRICE TREND INDICATOR tells you how many consecutive bars the price has gone up/down.
The SLOTMACHINE PRICE/VOLUME TREND INDICATOR tells you how many consecutive bars the price has gone up/down and how many consecutive bars the volume has gone up/down. Simple, huh? Why did I code 2 indicators when you can hide the plots? FOREX doesn't have volume so you don’t need it. But for us equity traders, it's fundamental to watch and see when volume starts to fade. VOLUME PRECEEDS PRICE!
This should really work great on a MULTI-FREQUENCY SLOTMACHINE.
For scalping, I use 1-minute radar, 15-minute radar, 60-minute radar and 1 minute, 5 minute and 15 minute charts (sometimes 60 minute chart too). See a previous post with a screenshot of my workspace. Lately, all I do is wait for GOOG to show a NEGATIVE Divergence on the 1 min ROC and then short it.
The other trade is using my Gridiron Strategy. I just trade with the team that has the "ball".
Trend Analyzer v1.1 (pg11)
1) Uses Intrabarpersist
2) No special dll's required
3) Fixes 0 Trends
4) Enhanced trade detection
To change bars back:
1) place the cursor over the indicator heading and right click
2) click on the first tab (if needed) and you will see additional bars to load and that's where you would enter 400, 800, or 1000.
3) click OK.
What you want is the least number of bars back that is needed for the indicator to function properly. One other thing, make sure you are using REGULAR HOURS during the trading day, otherwise some of the indicators will not be accurate, especially ones using the pivot calculations.
COMPASS / TREND USE
Q: 1. I like to use a minimum number of indicators for choosing stocks. Earlier you proposed that the best way is to use SMAA_COMPASS (60 min) combined with SMAA_DIVERGENCE (60 min).
a) Is there any later or different version of COMPASS, like SMAA_COMPASS_V2 that works better?
A: One compass is not better than the other - just different. The original gives direction only. The latest version gives direction via color and number of bars in that direction.