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Basic Method

The 30MBO rules are as follows:

ж Do not enter any trades for the first 30 minutes of trading in the markets for which the 30MBO is being used (a list of suggested markets will be provided later).

ж Make note of the high and low price for the first 30 minutes of trading.

ж After the first 30 minutes, buy if the ending price of the 30 minutes is greater than the high of the first 30-minute price bar by a predetermined number of ticks.

ж After the first 30 minutes, sell short if the ending price of the 30 minutes is less than the low of the first 30-minute price bar by a predetermined number of ticks.

ж Your stop loss can be either a predetermined signal (i.e., fail-safe or "dead" stop) or the opposite signal (i.e., a sell signal after an initial buy signal, or vice versa).

ж A trailing stop loss can be used to follow up an open position, since it has reached a given profit objective.

ж In the event of a stop loss on a reversing signal, liquidate your current position and establish an opposite position (this will become clearer in the examples that follow).

ж Exit your trade at the end of the day either several minutes before the close of trading or MOC (market on close).

ж Trade only in active markets.

ж If a long trade moves limit up in your favor, then take your profit; if a short trade moves limit down in your favor, then take your profit (assuming that the market you are trading has a daily trading limit).

The 30MBO buy signal is illustrated graphically as shown in Figure 4-1.

As you can see from Figure 4-1, a buy signal is generated when the market ends any half hour after the first half hour a given number ticks or more above its first half-hour high. The exact number of ticks is determined by market. The statistics for S&P futures are shown and discussed later in this chapter. Note that the signal can occur at the end of any half hour after the first half hour. Following a buy signal, the trade is followed up with either a stop loss or a trailing stop loss procedure (to be discussed). Now let's examine the ideal sell signal, shown in Figure 4-2.

As you can see from Figure 4-2, a sell signal is generated when the market ends any half hour after the first half hour a given number ticks or more below its first half-hour low. Note that the signal can occur at the end of any half hour after the first half hour. Following an entry signal, the trade is followed up either with a stop loss or a trailing stop loss once a given profit objective has been hit.