SPX (S&P 500 Index)
Trading with Regression Trend, 21 day MA, RSI, and MACDI just wanted to share some tricks I learned using some basic TA tools in trading view. I marked up the NASDAQ with some examples. Please note that hind sight is 20/20 and using these tools in real time is much harder.
First, I think the Regression Trend tool is underutilized by traders. It is a very powerful tool for automatically generating trading channels. IMO, I would wager that most automated trading algorithms use some form of this technique under the hood. Linear prediction is the easiest and most common form of regression analysis. What you are trying to do is fit linear a trend to the stocks movement. IT takes a little practice to know when a trend has switch from bull to bear and back again. I find that the 4h is a good time frame to eliminate a lot of the noise in prices. Also, heikin ashi instead of candle sticks can make this easier, but you can't see gap ups/downs, which can be important. One way to ID a trend change is to look for a new high to break out and clearly close above the current channel. Once you find the "pivot", then you start a new regression trend moving it along to keep up with the previous day's price. Some times it can be better to let it lag a day or two to better estimate the price's location in the trend, which may be important when a trend first starts as there is not much data for the prediction. What you are looking for is highs and lows that get close to or have a candle wick out of the trend. This give you a high probability that the price is about to reverse. That is kind of the whole thing. Just keep movin gthe trend along with each day looking for the price to touch the top or bottom of the trend.
Obviously, more info is better. This is where the other tools come in. The 21 day SMA is a nice one (you have to configure the MA to days not the default and set it to 21). If the price touches this level, it will most often bounce off (up in a bull market and down in a bear). You should also look at the RSI for obvious overbought and oversold conditions. Again, the 4H seems to work best for swing trading. You need to use the regression trend with the RSI as the RSI reading can give you a "false" trigger in strong markets as it can stay oversold or overbought for several days. Last by not least is the MACD. It is a great momentum indicator that you can use to determine when the market is switching gears from buying to selling and vice versa.
There are other more advanced tools like trend lines, fib levels, and Waves that are very helpful, but to be honest I think you can be very successful with just the basic techniques I described. Maybe another day I will go into more detail on those tools.
Hope this helps and good luck.
S&P 500 INDEX INTRADY TRADING STRATEGYSee the previous S&P 500 Index Post for day trading rules and setups.
TIPS FOR INTRADAY TRADING S&P.
If you have a 9 to 5 job and you only have an hour to trade per day you can use our day trading S&P 500 strategy. Ideally, the S&P 500 day traders will be trading based on trading strategies that take a short amount of time.
Now, because the market structure is fractal in nature, we can use the same S&P trading strategy for day trading. However, we’re going to add a simple trading trick.
Day Chart
In Up-trends price has the tendency to stay glued to the 3 sma high.
In Down-trends price has the tendency to stay glued to the 3 sma low.
If you pay close attention to the price action relationship with the 3-period SMA, you will notice two things:
During strong uptrends, the price has the tendency to stay glued to the 3-SMA high.
During strong downtrends, the price has the tendency to stay glued to the 3-SMA low.
With that in mind, we can now develop a very successful day trading S&P strategy. The entry and exit rules are the same, but to avoid the inherent intraday noise we’re only going to use the daily chart as a filter as follows:
When the daily chart shows price glued to the 3-SMA high, we’re going to switch to the 15 minute time frame and only take long trades.
Remember that you need to exercise discipline and develop a successful daily routine that can fit into your schedule.
Final Words – S&P Trading System
In summary, the S&P trading strategy is a trend-dependent strategy that can ride both bullish markets and bearish markets. If you’re an aspiring trader you can use our day trading S&P 500 strategy and take advantage of the intra-day volatility.
To summarize, the S&P trading strategy has two main advantages:
The daily volatility that appeals to traders.
Broader exposure to the US stock market.
Don’t forget you can always use the S&P trading system with other markets (stocks, commodities, currencies, and cryptocurrencies) just make sure you manage your risk and keep losses at a minimum. Last but not least, protect yourself and use a proper risk management strategy.
Thank you for reading!
S&P 500 INDEX DAY TRADING STRATEGYWHY TRADE S&P 500 INDEX?
Off the bat, you need to know that the S&P index moves a lot. In other words, the S&P 500 volatility is high. In the stock market, we have something called the VIX, which measures the implied volatility (expectation of future volatility) of the S&P 500 Index options.
For those of you who don’t know what’s VIX trading just search for "How to Trade VIX Strategies– Wall Street’s Fear Index."
Higher S&P trading volatility means more trading opportunities for you. If you are a relatively risk-tolerant trader, exploring the stock market can be very profitable.
You’re going to have price movements that are way far and beyond what you see in the Forex currency market.
Secondly, trading the S&P 500 will give you diversified exposure to the entire US stock market. Rather than simply owning one single stock that might or might not perform well, the S&P 500 index will give you exposure to 500 large-cap US companies.
Your performance won’t be tight to the performance of one single stock, so you can increase the chances of making a profit.
If you want to trade the US stock indices you need to know when is the best time to trade the S&P 500. In other words, we’ll examine what are the most volatile S&P 500 trading hours.
WHEN TO TRADE THE S&P 500?
The best time to trade the S&P 500 index is when the US session begins because that’s when the trading volume is the highest.
The US day trading futures market opens at 9:30 US EST.
As you'll find while trading with every market, the S&P 500 price vibrates its own unique way.
If you’re a day trader, you might wonder:
When is the best time to trade S&P 500?
The best times to trade SPX is during the hours with the highest volume:
Between 9:30 AM – 11:00 AM EST, the US stock market officially opens which overlaps with the last 1.5 hours of European trading.
Between 2:00 PM – 4:00 PM EST prior to the stock market close the professional trading activity increases again.
Usually, those are the most liquid hour of SPX trading. As a “consequence” of higher liquidity, the S&P 500 buy and sell spreads are much tighter during this time window.
To verify if this is true, check out the 15-minute chart with an 8-period ATR (Average True Range). This will measure the average range of a 2-hour period.
We must ensure that we use the best S&P 500 trading platform.
WHAT'S THE BEST S&P 500 TRADING PLATFORM?
In this section, we’re going to reveal what is the best futures trading strategies software platform.
First, it’s important to know that you can start trading the S&P 500 index with multiple financial products like:
Futures.
Options.
Exchange-Traded Funds (ETFs).
Investment Funds.
Contracts for Difference (CFDs).
Spread trading.
So depending on the financial instrument used and your preferred broker you can trade the S&P 500 on the following trading platforms:
TradeStation – low commission trading platform.
Thinkorswim – best for options trading.
E*Trade – most trusted futures trading platform.
TD Ameritrade – best desktop platform.
Interactive Brokers TWS – best for professional traders.
MetaTrader 4 trading strategies, MetaTrader 5 and cTrader – best for retail traders.
Once you have decided which trading platform suits better your trading style, let’s see your guide to trade SP 500.
HOW TO TRADE THE S&P 500?
We’re going to outline few trading instructions to keep in mind when trading S&P 500 index.
Even when it seems like the S&P 500 price seems like consolidating, the same level of choppiness you see with Forex trading won’t occur that often with the US stock indices.
Under this circumstance, if you want to learn how to trade the S&P 500 index, you kind of know-how to trade in volatile markets.
If you want to learn more about volatility trading, please check out on the internet: Volatility trading strategy - Profit Without Forecasting Price Direction.
You can trade the US indices via:
Contracts for Difference (CFDs) which tracks the price movement of the underlying instrument. If the S&P 500 price is going up the CFD contract will rise and vice versa.
Exchange-Traded Funds (ETFs) which is even better. The biggest and most heavily traded ETF in the world is the SPDR S&P 500 ETF Trust Fund also known as the SPY.
For small investors, it’s better to trade the S&P 500 index via ETFs or CFDs due to the use of leverage. When trading SPDR S&P 500 ETF, traders can go both long and short. So, you can profit even when the market goes down.
Now, we’re going to share with you our favorite S&P trading strategy.
S&P TRADING STRATEGY
Having a systematic methodology for trading the SPX is of utmost importance.
Over the long run, the S&P 500 index has the tendency to gradually climb and every once in a while we get sharp sell-offs that can lead to stock market recessions. And the process repeats all over again, due to the fractal trading nature of the S&P 500 price.
Now, what’s the main takeaway.
If your answer is:
“It’s more profitable to buy and hold the S&P 500 index, you’re right.”
Did you know that if you bought the S&P 500 index at the close of each trading session and took a profit at the next open, you could have gained 13.3 percent return in 2019. This means you could have singlehandedly outperformed many of Wall Street's most respected hedge funds.
Note* This S&P trading strategy would have given you 3 wins and 1 loss if traded over the past 4 trading sessions.
However, this S&P trading strategy doesn’t have any strong backing to suggest it will work in the coming years. That’s why we need to develop an S&P best trading system with more consistency that can work year after year.
So, do you want to learn a simple and timeless way to trade the S&P 500 successfully?
With that in mind here is a profitable S&P trading strategy.
First, let’s lay down the things needed to trade successfully the S&P trading strategy:
3-period SMA (simple moving average strategy) calculated using the low prices
3-period SMA (simple moving average) calculated using the high prices
Note* The S&P price will be confined between the 2 moving averages 85% of the time.
Here are the entry and exit rules of the S&P trading system:
Buy at the 3-SMA low and exit your trade at the 3-SMA high.
For selling is the opposite: sell at 3-SMA high and exit your trade at the 3-SMA low.
The stop loss placement is above/below the 3-SMA low/3-SMA high.
Now, to add more confluence for our S&P 500 trading signals, we’re going to add one more element:
We’re only going to buy when we touch the 3-SMA low if both moving averages are stretching to the upside.
Conversely, we’re only going to sell when we touch the 3-SMA high if both moving averages are stretching to the downside.
As you can tell this S&P 500 trading strategy is a trend following strategy that takes advantage of the small price retracement.
What can we learn from 1982 about this 4 Wk range1st Rule = All Signal& MACD lines >0 2nd Rule = 4 Wks Histogram >0 but sliding 3rd Rule = when range of 1st Rule is < high of previous Wks (white verticals). Best match 1982 because high of previous weeks was ATH and dive cut through previous ATH exactly like today in 2020. NOT ADVICE. DYOR.
TAAT : Trading IPOsTAAT IPOed on the Canadian Stock exchange on the 24th of June this year. It had returned 39% over the past 3 months over some optimism on its E-cigarettes business. Vanguard Subscribers were asking how to trade this particular stock.
Multiple Time Frame Analysis show an UPTREND in all timeframes from the 4hr to the Monthly
Price trades above the Supertrend line on all time frames : UPTREND
Price is UPTREND above the Ichimoku Cloud SSSA/B lines
Technique : Aggressives buy when price retreats and bounces as close to the Supertrend line as possible and place stop loss on the SSSA line . Once price clears the Supertrend line comfortably, raise your stop loss to the Supertrend line.
Conservatives buy when price breaks through SSSB line and re-emerges from below to above the SSSA line. Buy on the first candlestick close ABOVE the SSSA line.
Target Price/EXIT : Sell only when your stop loss is hit = Supertrend is violated. If your initial trade had been successful, a raise of your stop loss from the SSSA line to your Supertrend Line would have given you a risk free trade covering your commission and cost of your trade.
Why Beginners Lose Money Even in an UptrendIf you like this analysis, please make sure to like the post!
I would also appreciate it if you could leave a comment below with some original insight.
In this post, i'll be focusing on the psychology aspect of trading and investing that most people overlook.
Contrary to common belief, in my personal opinion, understanding a trader and investor's own psychology is significantly more important than educating oneself on trading techniques and learning how to read financials.
'Buy low sell high' is the motto. As simple as it sounds, why do most people lose money trading or investing?
There are four major mistakes that most beginners make:
1. Excessive Confidence
This stems from the idea that people think of themselves as special. They think they can 'crack the code' in the stock market that 99.9% of people fail to, and eventually make a living trading and investing. However, taking into consideration the fact that more people lose money in the market, this form of wishful thinking is the same mentality as going into a casino feeling lucky. You may actually get lucky and win big the first few times, but in the end, the house always wins.
2. Distorted Judgements
While simplicity is key, the approach most beginners make in trading and investing are too simplistic, to the extend where it's hard to even call it a trading logic or reason to invest. They spot a few reoccurring patterns within the market, and this is almost as if they discovered fire. It doesn't take long to realize that the "pattern" they spotted was never based on any solid reasoning, or worse, wasn't even a pattern at all in the first place.
3. Herding Behavior
The fundamentals of this is also deeply rooted in a gambling mindset. Beginners are attracted to the idea of a single trade or investment that will make them a millionaire. However, they fail to realize that there is no such thing. Trading and investing is nothing like winning the lottery. It's about making consistent profits that compound throughout time. While people should definitely look for assets that have high liquidity and some volatility , the get-rich-quick mentality drags irrational beginners into overextended/overbought stocks that eventually drop drastically.
4. Risk Aversion
Risk aversion is a psychological trait embedded within all of mankind's DNA. Winning is fun, but we can't tolerate losing. We tend to avoid risk, even when the potential reward is worth pursuing. As such, many beginners take extremely small amounts of profits, in fear that they might close their position at a loss, trading with a terrible risk reward ratio. In the long run, their willingness to not take any risks leads to losses.
Depending on the price action, they also go through seven phases of psychological stages:
- Anxiety
- Interest
- Confidence
- Greed
- Doubt
- Concern
- Regret
As we can see in the chart for the S&P500 (SPX) , there are price points at which beginners would buy during their 'confidence' phase, and sell during their 'concern' phase.
As a result, they would be losing money even when the market moves in an upward trend.
Even when the market is at a clear uptrend, it goes through phases of impulse moves, and corrective moves.
However, as beginners are swayed away by their emotions, they fail to recognize the overall trend, resulting in them buying high and selling low .
Conclusion
The most important thing that beginners need to realize before they start trading or investing is that human beings are emotional beings, and as a result, they are not different from the rest of the people in the market. All successful traders and investors throughout history have had superb meta-cognition. They understand their own psychology, as well as that of other participants in the market, allowing them to make rational decisions with patience, rather than hasty decisions based on emotions.
This signal only appeared 4x since Apr 1975. What can we learnThe 1st a 28% loss followed from the low, the 2nd a 46% loss, the 3rd a 1.9% loss, & the 4th a 23% loss. Otherwise signal good support level. What more can we learn? Key: 1st 2 Mths after red all 3 Histograms dark green NOT ADVICE DYOR
Key: 1st 2 Mths after red all 3 Histograms dark green. Draw line of support from low of first bar.
The first time had a closing month below red support was on the ninth attempt
Here is a close up of March 2008
Max healthy pullback in analysis <7% from ATH. Max danger if....Max healthy pullback in this analysis <7% from ATH. Max danger if market drops >9.89%. NOT ADVICE DYOR
Construction Details:-
All verticals where Histogram >0 but trending down i.e. light green. All horizontals are previous highs before histogram started trending down. Blue vertical indicates where price subsequently broke through two horizontal supports. Green diagonals oddly both equal roughly same percentage rise.
SPX needs Bitcoin/Crypto to go parabolic more than SPX to......SPX needs Bitcoin/Crypto to go parabolic more than SPX to break out of ATH. CAVEAT - small sample size. NOT ADVICE DYOR.
Used Blue Verticals From Analysis Of SPX Below
Max healthy pullback in this analysis <7% from ATH . Max danger if market drops >9.89%. NOT ADVICE DYOR
Construction Details:-
All verticals where Histogram >0 but trending down i.e. light green. All horizontals are previous highs before histogram started trending down. Blue vertical indicates where price subsequently broke through two horizontal supports. Green diagonals oddly both equal roughly same percentage rise.
Bitcoin set to smash ATH in the next 8 to 12 WKS thanks to......Astronomical returns possible: Bitcoin set to smash ATH in the next 8 to 12 WKS thanks to "Big Oil" signal after SPX setting ATH's >> WK 16 DEC 19 63% 8 WKS >> WK 25 SEPT 18 437% 11 WKS >> WK 28 JAN 13 1383% 10 WKS. The only time signal did not work was when bitcoin MACD histogram was in red. CAVEAT: WTI Crude Oil Weekly MACD line (source HIGH) has not yet closed >0. Big Oil signal still needs to confirm. NOT ADVICE. DYOR.
Buffet indicator- The world of growth stocksYes, the stock market is overheated judging by all valuation metrics.
For those of us who don't want to jump the gun and want to stay in the trend until it is broken, sector ETFs offer better return than major indexes such as S&P 500 and NASDAQ, but are not as volatile as individual stocks.
According to Goldman Sach, IT and consumer discretionary have risk adjusted return (Sharpe ratio) of 0.9.
Stay safe out there.