Algorithm Builder - INDICES - SPX500 - Review Oct 18th, 2019

FX:SPX500   S&P 500 Index
Hello traders

I. Daily tutorial publishing challenge officially begins

Starting today, I'll be publishing every night what were the setups given by the Algorithm Builder Indices.
You'll find more information about that script in this script signature.

II. Wisdom of the day

Last Friday was the Triple witching hour day. That is the day where the US contracts come to expiration on the US market - this event happens once a month.
Hopefully, only once a month, because this day is often particularly hard for traders to trade.

Those days are the expiration of three kinds of securities:
1. Stock market index futures ;
2. Stock market index options;
3. Stock options.
The simultaneous expirations generally increases the trading volume of options, futures and the underlying stocks, and occasionally increases volatility of prices of related securities.

III. Why a 1-minute chart?

The indicator won't give more than 3/5 trades per day even. This is not a scalping trading method, it's intraday and based on smoothed indicators for entering in a strong trend only.
Those are the most secure trades possible because:
- the Algo Builder waits for a strong confirmation and will avoid the fakeouts
- the 1 minute allows to enter very early. This point is crucial.
We made it so that to enter early but with a minimum of security.

IV. SPX500 - Signals of the day

2.1 Morning trade

1. 8:45 am
We had a difficult move to take because in front of multi-timeframes resistances. and US stocks opening 45 min later.
What I usually do, is to wait for a pullback near the EMA 20 which has a few huge benefits:
- generally gets me a better entry price (lower for a long, higher for a short)
- reduce the distance between my entry price and stop-loss - hence reducing the risk of the trade
The Algorithm Builder - INDICES calculates the stop-loss internally, based on the price where the signal appears

2. 10:12 am and 11:45 am

The IDEAL scenario for the Algorithm Builder. Leading trend is red, short signal, no supports near, a great setup with a decent risk-to-reward ratio.
When we're in the same direction as the leading trend and the next algorithmic SMAs are a bit far, those are the moments where I know that my reward is far greater than my risk.
Would I overleverage or increase my position size drastically anyway knowing this is the Triple witching hour day? Maybe not :)

The three morning trades gave about 270 pips

2.2 Afternoon trades

1. 1:05 pm

We now see a BUY against the leading trend in red. Which means, the trend is not too strong to go crazy yet.
The method tells to wait for a pullback near the EMA 20 to enter with more security

2. 3 pm

In the same direction as the leading trend but in front of MTF resistances. Even waiting for a pullback allowed to grab the last 30 pips of the day

To quote Ice Cube - it was a good day :)

All the best,
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