Trading Just SVVR4×1
Posted on June 11th, 2009
Written by Richard
Posted in: N/A (old archives)
The other day, I posted a different way to colorize vr4×1, and I posted a screenshot showing how you might want to enter trades when price pushes in the opposite direction of the volume indicator.
Tonight at our eotpro indicator lesson school, I’m going to go over this idea with people in detail. Here’s the 5 examples I spotted on today’s ES action (click on the image to enlarge):
With just that one indicator and price, you can get 4 winners and 1 loss today. I was at my desk and traded the last one today, which happened to be the sweetest one, too. Nice!
All I look for is:
- Price diverges against VR4×1’s direction for 3 or 4 bars in a row, then turns back in VR4×1’s direction
- If those 3 or 4 bars were also against the overall price trend, then enter the trade as price goes back in VR4×1’s direction
- If those 3 or 4 bars were with the current price trend, then assume VR4×1 is early and only enter if this is also a double top or double bottom
That last criterion is a fail-safe against cases where VR4×1 is out of sync with the price trend. Often volume will precede price, and turn up before the end of a downtrend or down before the end of an uptrend. You don’t want to step in front of trains! But if there’s strong VR4×1 divergence during a double bottom or double top, then it can be worth it to put on a position and see if you’ve caught a reversal.
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© 2010 Richard Todd. I am not a financial advisor, and nothing on the site should be considered investment advice or actionable recommendations. I'm just an individual, saying what I think, and sharing my experiences.