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Monday, September 2, 2013

Selling Tops and Buying Lows on Ninjatrader

Selling New Highs and Buying New Lows are known setups with big Profit Potential when we catch a Reversal. But we can also get several losers in Row on a trending or Impulsing Day.
It is always recommended to have some additional confirming factors over the zone we want to Buy or Sell.

We can add structural factors, like a higher time frame wave possible termination, or well known fib retracement, etc.
The more factors providing from different timeframes, the better odds to succeed in our trade.

Looking at technical indicators, we can also look for divergence and/or overbought/oversold indications. 

For example we can look at the MACD ( red line ) making a higher low while price is making new lows :


We can also look at a stochastic (red line) and watch for 2 things ;
  • red line is over a defined value, so it is over bought AND it is going down
  • red line is below a defined value, so it is over sold AND it is going up
See following picture :


If we filter those conditions on the Stochastic, and replace them by dots ; Cyan Dots for Over Sold ( Buy Signals ), and Red Dots for Over Bought ( Sell Signals )
we get this Chart :

...it looks really nice, but we must remember that dots are calculated ( so painted ) after bar is finished, so it is not possible to enter with limit orders.
See this following example :
That means that we have 2 options ;
Try placing a limit order slightly below the open of Bar, near the Close of Signal Bar, or placing a Buy Stop some ticks over the High of Signal Bar.

On The Indicator Store, we have developed a Reversal Indicator as shown on Previous Pictures, that works intrabar, so it shows unconfirmed Signal Dots. That gives us the time enough to place a stop order. After the bar completes, that signal will become on confirmed, so we can leave the order working, or will be removed, so we can cancel our order.
Take into account that if market keeps going down, the unconfirmed signal will be removed and our buy stop order will stay unfilled, so we have enough time to cancel it.

This is a link to the TIS_Reversal Indicator on The Indicator Store WebSite

On this video it is possible to see it working live


This video with no audio will show some examples on real time :



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Pablo Maglio The Indicator Store 

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