Custom Search

Examining Some Signals

Examining Some Signals

Figures 13-7 through 13-11 illustrate O/C signals in a number of marВэkets using various time lengths along with my hand-written comments.

Summary and Conclusions

The O/C system is a sound and useful one for day traders. Its rules of application for entry signals are specific, objective, and mechanical. It is readily tracked by computer and tends to get on board when major moves occur within the day time frame. I recommend tracking this method in the more active markets, particularly those markets which have a high dollar value per tick. As with most day-trade systems disВэcussed in this book, entry signals are specific and objective. Exiting posiВэtions, however, are less objective. This method, in particular, is amenable to the use of a fairly close trailing stop-loss. You may wish to exit at a given price or time target. It is not uncommon for large profits to be diminished substantially as a result of waiting for a reversing signal.

Yet another suggested method of exit is to use a shorter-term time frame for exit than was originally used for entry. If you use an entry sigВэnal generated on a 10-minute S&P chart, you could exit when the 3- or 5-minute S&P chart gave its subsequent reversal signal. At this point you would not reverse position, you would merely close the position out. This, by the way, is an excellent method for exiting positions using other timing signals than the O/C.