LOS BOTS 5/11/12

BOT TRADING SYSTEM

Today was another excellent day for the BOTs.  In the pre open there was a range bound PA that allowed a long at 1350 and a later short at 1350.25.


The BOTs were set at long 1352.5 and short at 1347.25.  At Bar 1 we had the "perfect storm" for trading:  A reversal of the SB, a break of the EMA, and the 1348 magnet from this week.  Price ran the range (5.25 points) then added another +5 and +10 in the break out.


At the LBBO10 (b23-24) price fades the BO10 and reverses.  A two to three bar trend line and the EMA was solid resistance for the bearish channel.  Channels this strong, and after a reversal, are very productive and easily played.  Bull pull backs will be counter trend, and offer entry points in the channel.  Another plus for BOT players:  the tendency for price to return to a lower level (BO10 to 5) and even the LB in a strong channel.  Bull reversals would PB to the SB.


The value play is with trend (the channel) at the resistance (EMA or TL) or the support (EMA/TL for the bulls). Counter Trend (CTs) are higher risk and stressful plays in a channel.  They can be sluggish and stop short of a reasonable profit.  It is also believed that they promote over trading.


Today, the reversal channel hit with trend +5 then +10, with another +3 to the middle BOT at the end of the day.  CT longs(traders looking for the bottom, or a channel reversal) offered the following:  
Trader sees a bull bar and enters the close. Max profit if order hits, timing perfect , etc.
B28    .5   
B35   .25
B37   .5
B42    0
B46    0
B48    +2
B53    .25
B58    0
B60     0
B63     .5
B69    .5
B72    0
This is perfection, and I have never met one of those traders.  Twelve trades for 4.5 points, and that assumes the trader quickly hit break even (a 0) when the trade sold the bar after the bull entry.