Splattery will get you Everywhere

[EDIT: Wanted to mention that I'll be going over this chart again live in the eotpro live room tonight, July 17, 2008, at 6:45 Central time. This is our "indicator lesson school" night, and everyone is welcome to attend.]

All I gotta say is: Damn! That’s one good indicator.

Or at least, it appears to be. I went through every one of this morning’s signals with folks in the eotpro.com live room a minute ago, and they were timed flawlessly by the new Volume Splatter Indicator. If you have no idea what that is… then check out my previous few posts about it.

Here’s a wide screenshot with six signals from my Bid/Ask/Stoch Entry signal. You can see on the screenshot that I’ve labelled the trades 1 to 6. Let’s see how the volume splatter indicator helps us trade with astounding accuracy (click the thumbnail to enlarge it):

1. We have a short signal, but the large (magenta) traders are posting a sizeable dot above their zero line. They are active and buying. This is a danger sign that they could be supporting the price here. So, I’d wait for a couple bars to see if the big boys and girls will start selling. They don’t. Skip this trade.
2. We have another short signal. This time, the big traders are not too active (small magenta dot), but are at least net sellers. You’d either get in here or wait one bar to see a further drop in the magenta series, with a bigger dot. You get in. Price pays you, and you have confirmation from large, falling magenta dots. You have caught a ride down with the big traders. Congrats! Once the magenta dots start rising, note that you have several bars to pick an exit. This appears to be typical, as price will continue paying you even as the sellers step aside.
3. Another short signal. Again, the large traders are net buyers here, though not active (tiny magenta dot above the zero line). If you wait and see them become sellers (though still not active), you might sell here, but would quickly bail and reverse at the next signal. So, probably a small loss here, depending on how aggressive you are.
4. A long signal, with active buying from the large traders. Great! Price starts paying you immediately, and though the large traders quickly become inactive, the dots do not fall. So, buying pressure stays on, even though the amount of it declines. When the magenta dots finally do fall, you know to book your profits. Couldn’t be simpler.
5. Another long signal. The large traders don’t seem too interested, as they have tiny magenta dots at their zero line. In fact, a bar or two after entry, they momentarily dip below their zero line. If you got in, you’d bail for b/e, or maybe a tick or two of profit.
6. Last long signal. Now this is what you want to see! The magenta dots have been rising steadily for the last few bars, and are printing large dots. Price pays you immediately after entry, and the buying pressure stays on. When the magenta dots start to fall, you have several bars to find a good exit point, before price drifts down significantly.

As you might be able to tell (especially if you heard me talking about it in the live room), I am extremely happy with how this indicator is acting. I hope it holds up for another week or so, and then I’d be confident releasing it to eotpro elite-series subscribers.