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Trades Per Day

аAt times, a 30MBO buy will reverse to a 30MBO sell. Hopefully, you will have been stopped out at a profit before a reversing signal occurs. If, however, it does reverse at a loss, then you will take the new signal in the given direction. According to my latest work, you can take up to five trades within one day on reversing signals. Note that once you have been stopped out of a long position, your next trade must be a short position or no position at all (and vice versa).

Now that I have illustrated the 30MBO buy and sell signals in their ideal form, let's examine a few actual market examples, complete with their breakout prices, entries, and exits, to illustrate how the signals appear in actuality. Figures 4-3 through 4-10 show 30MBO buy and sell signals as captioned.

Stop Loss and Trailing Stop Loss

Since the backbone of many systems is the way in which they take their losses, it behooves us to spend a little time and effort explaining and illustrating the stop loss procedures. The 30MBO stop loss procedure is very simple but concise, as explained above. Use it!

What to Expect

The 30MBO is an excellent method for day trading, provided you adhere to the following rules and procedures. Frequently there is a considerable difference between what is described in theory and what transpires in reality regarding a trading system or method. Here are a few observations based on my actual experiences with the 30MBO. My observations are not necessarily presented in order of importance.

While the 30MBO rules of application are straightforward and simple to understand, many traders are either incapable or unwilling to follow the rules. This, of course, denigrates the validity and/or performance of the method, rendering it virtually useless.

The greatest difficulty in using the 30MBO is waiting until the end of the day to close out your position or using the stop losses indicated. Another serious difficulty is reversing your trade when and if the time comes to do so.

There is a great temptation to use a trailing stop once a profit has been made, or to add more positions. There are ways to do this effectively without jeopardizing your open profit. The temptation of most traders is to use a trailing stop loss that is very near the current market price. I have found this to be an ineffective approach. More often than not, you will get stopped out only to watch the trend continue in its existing direction. You are left with no position. My studies suggest that if a trailing stop loss is to be used, it must be a wide stop - in other words, a stop loss that is far away from the current market price. Typically, an effective stop loss should be at least 50 percent or more away from the current market price. In other words, you must be willing to give back 50 percent or more of your open profit on a given trade. I have included a statistical record of the 30MBO for two different time frames (Figures 4-11 and 4-13). Figure 4-12 shows the 30MBO in chart form. What do you conclude?