In the January 2011 issue of Futures Magazine Chris Vermeulen and part of his AlgoTrades algorithmic trading Systems was featured.
This four page tutorial talk about how you can anticipate market turning points by using market internals of volume flow, advance decline line, and the put/call ratio.
Here they talk about how the data points being analyzed could be used to time and trade Emini Futures and exchange traded funds on the SP500 index.
Automated Trading Systems Tutorial
Through the use to market internals, also known as breadth indicators one can get a solid feeling of how the majority of market participants are feeling and doing at any given time. And because the financial markets are driven by fear and greed we can hone our trading algorithms to focus only one extreme sentiment situations when the probability of a trend reversal is likely to take occur.
Trading on sentiment alone is note enough to build an automated algorithmic trading system, it is a big part of the equation for building automated trading systems.
With these indicators explained in the tutorial you can stay ahead of the herd and capture quick sharp move in the SP500 index while the majority of traders are sitting around scratching their head wondering what the heck just happened.
Wait for each of the three internal indicators to reach extreme levels before you initiate a trade is the key to its success. Be aware that the market trend can keep individual indicators at extremes for an extended period of time. Trading on the anticipation of an overbought/oversold condition before all three indicators confirm your suspicions is a sure way to enter early and lose money. Be patient, and wait for the indicators to align. There will be plenty of time to enter a position and likely at a more favorable price.
This strategy (which are now automated trading systems) works best in a downward trending market. While it also works well in a bull market, there are some minor changes required for each of the strategies to perform their best.
This simple system is a great way to squeeze 1-2% out of the stock market each week with very little effort and with our new automated trading systems at AlgoTrades.net you can do this 100% hands free.
In the next post we fast forward three years, and talk about the AlgoTrades as the Automated Trading System for the Smart Investor.
Read Automated Trading System Tutorial: Click Here
WHAT PEOPLE ARE SAYING ABOUT AUTOMATED TRADING SYSTEMS TUTORIAL:
“Very informative; I just wish I can get a chart with all those red dots. Thanks for the info.”
“I was very happy to read this article as it’s importance in keeping trading simple is critical.”