Dow Jones Industrials (DJI):
An Example of a Trading
System using the SBV Oscillator
October 24, 2008
+27% on the DJI in a month
This week SBV chart example is based on the 30-day SBV(20)
DJI (Dow Jones Industrials) chart.
This week SBV chart example is a
continuation of previous
example on
October 17, 2008. In this week's
example we use the same settings that were already used by showing the
consistency of our trading system over the long period
of time.
Since July 24, 2008 we have been paying close attention to Dow Jones Industrial 30-day
SBV(20) - the result exceed all our expectation.
Chart 1. Relationship between the SBV oscillator and
index reversal points. DJI index.
30-day view. 1 bar = 30 min. SBV(20)
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It's
Simple and profitable
In our trading example, we applied the following
simple system which is based on our SBV indicator:
- Once the SBV indicator declines below minus 20% (the
indicator will now show red), we enter a short position (if we are
not already short);
- Once the SBV indicator advances above minus 20% (after having
been below that level), we will enter a long position (the indicator
still shows red);
- Once the SBV indicator rallies above plus 20% (the indicator
will now show green), we enter a long position (if we are not already
long);
- Once the SBV indicator declines below plus 20% (after having
been above that level), we will enter a short position (the indicator
still shows green);
- If the SBV dropped into negative territory and started to rise without
hitting the signal line, close the short position when the SBV is back in
the positive territory, and stay in cash until a new buy signal is
generated. Vise versa for a long position.
We stated in our daily market
outlook on October 9, 2008 and our last week example on
October 10, 2008 "As we already mentioned in January 2008 and
in September 2008, when the SBV hit extremely low levels it is recommended to
reduce the negative level from minus 20% to minus 60-70% after such strong
bearish volume accumulation. This is for those who use our 60-day SBV(20) simple
trading system. The reason is that it could be enough to confirm a recovery. The
odds for a continuation of this afternoon's rally are increasing." -
the same principles were applied to the 30-day chart on October 13, 2008. When we have extremely
oversold market defined by big bearish SBV accumulation (a lot of red) and when
SBV hitting extremely low negative levels it could be wrong to wait until SBV
rises to minus 20% to close position. Waiting when minus 20% levels is hit could
wipe out major part of the profit.
Table 1: Trades based on the 5-rule
(additional stop-loss rule) system.
|
Open Trades |
Closed Trades |
Profit
(points) |
|
Time |
Motivation |
Trade |
Index |
Time |
Motivation |
Trade |
Index |
|
09/26/08 |
rule #4 |
Sell Short |
10943 |
09/30/08 |
rule #2 |
Buy to Cover |
10767 |
+176 |
|
09/30/08 |
rule #2 |
Buy |
10767 |
10/02/08 |
rule #4 |
Sell |
10597 |
-170 |
|
10/02/08 |
rule #4 |
Sell Short |
10597 |
10/13/08 |
rule #2 |
Buy to Cover |
8886 |
+1711 |
|
10/13/08 |
rule #2 |
Buy |
8886 |
10/14/08 |
rule #4 |
Sell |
9322 |
+436 |
|
10/14/08 |
rule #4 |
Sell Short |
9322 |
10/17/08 |
rule #2 |
Buy to Cover |
8934 |
+388 |
|
10/17/08 |
rule #2 |
Buy |
8934 |
10/20/08 |
rule #4 |
Sell |
9024 |
+90 |
|
10/20/08 |
rule #4 |
Sell Short |
9024 |
10/20/08 |
rule #3 |
Buy to Cover |
9050 |
-26 |
|
10/20/08 |
rule #3 |
Buy |
9050 |
10/21/08 |
rule #4 |
Sell |
9029 |
-21 |
|
10/21/08 |
rule #4 |
Sell Short |
9029 |
10/24/08 |
rule #2 |
Buy to Cover |
8340 |
+611 |
|
10/24/08 |
rule #2 |
Buy |
8340 |
10/24/08 |
rule #1 |
Sell |
8324 |
-16 |
|
10/24/08 |
rule #1 |
Sell Short |
8324 |
10/24/08 |
rule #2 |
Buy to Cover |
8500 |
-175 |
|
Total:
|
+3004
(+27.5%) |
Note:
The 20% level for the SBV indicator was
determined in relation to the prevailing market conditions at the time the
trading examples were selected. In order to establish the optimal critical
levels for the SBV indicator, traders should consider the current market
situation and review a chart history of prior volume surges including their
magnitude (i.e., the level the SBV indicator reached).
Our charts are unique in that they give traders the option to choose
specific chart settings that best fit their personal trading styles and risk
tolerance. Traders can thus develop and test their own trading systems. On our
charts, you can scroll back in history to test any system you created.
| Disclaimer: The chart
example is intended for educational purposes only - it does not
constitute trading advice, nor does it make or imply any market trend
predictions. |
More Examples:
|
Date |
Index |
Timeframe |
Result |
Number of Trades |
|
Jan. 02, 2009 |
S&P 500 |
60-day |
+242 points (+24%) |
9 "Long"
and 8 "Short" |
|
Dec. 19, 2008 |
S&P 500 |
60-day |
+294 points (+31%) |
13 "Long"
and 12 "Short" |
|
Dec. 19, 2008 |
S&P 500 |
60-day |
+290 points (+30%) |
12 "Long"
and 12 "Short" |
|
Dec. 12, 2008 |
S&P 500 |
10-day |
+91 points (+11%) |
9 "Long"
and 8 "Short" |
|
Dec. 5, 2008 |
S&P 500 |
60-day |
+354 points (+36%) |
10 "Long"
and 10 "Short" |
|
Nov. 28, 2008 |
S&P 500 |
60-day |
+420 points (+43%) |
10 "Long"
and 9 "Short" |
|
Nov. 21, 2008 |
S&P 500 |
60-day |
+244 points (+20%) |
14 "Long"
and 10 "Short" |
|
Nov. 14, 2008 |
Nasdaq 100 |
10-day |
+69 points (+5.1%) |
5 "Long"
and 6 "Short" |
|
Nov. 7, 2008 |
DJI |
30-day |
+3,137 points (+30%) |
5 "Long"
and 6 "Short" |
|
Oct. 31, 2008 |
S&P 500 |
5-day |
+42 points (+4.7%) |
9 "Long"
and 9 "Short" |
|
Oct. 24, 2008 |
DJI |
30-day |
+3,004 points (+27%) |
5 "Long"
and 6 "Short" |
|
Oct. 17, 2008 |
DJI |
30-day |
+2,886 points (+26%) |
4 "Long"
and 4 "Short" |
|
Oct. 10, 2008 |
DJI |
30-day |
+2,262 points (+20%) |
5 "Long"
and 6 "Short" |
|
Oct. 3, 2008 |
DJI |
30-day |
+958 points (+8.3%) |
8 "Long"
and 9 "Short" |
|
Sept. 26, 2008 |
S&P 500 |
60-day |
+74 points (+5.8%) |
7 "Long"
and 7 "Short" |
|
Sept. 19, 2008 |
S&P 500 |
60-day |
+114 points (+9.0%) |
6 "Long"
and 7 "Short" |
|
Sept. 12, 2008 |
DJI |
30-day |
+1,232
points (+11%) |
5 "Long" and 5 "Short" |
|
Sept. 5, 2008 |
DJI |
30-day |
+734 points (+6.3%) |
5 "Long"
and 5 "Short" |
|
Aug. 29, 2008 |
DJI |
30-day |
+600 points (+5.2%) |
6 "Long"
and 6 "Short" |
|
Aug. 22, 2008 |
DJI |
30-day |
+995 points (+8.7%) |
5 "Long"
and 5 "Short" |
|
Aug. 15, 2008 |
S&P 500 |
15-day |
+41 points (+3.2%) |
7 "Long"
and 8 "Short" |
|
Aug. 8, 2008 |
S&P 500 |
15-day |
+44 points (+3.5%) |
6 "Long"
and 7 "Short" |
|
Aug. 1, 2008 |
S&P 500 |
15-day |
+45 points (+3.6%) |
4 "Long"
and 8 "Short" |
|
July 25, 2008 |
S&P 500 |
15-day |
+28 points (+2.2%) |
1 "Long"
and 3 "Short" |
|
July 18, 2008 |
S&P 500 |
60-day |
+7 points (+0.0%) |
9 "Long"
and 5 "Short" |
|
July 11, 2008 |
S&P 500 |
15-day |
+103 points (+7.8%) |
4 "Long"
and 6 "Short" |
|
July 3, 2008 |
S&P 500 |
15-day |
+69 points (+5.2%) |
4 "Long"
and 6 "Short" |
|
June 27, 2008 |
S&P 500 |
60-day |
+62 points (+4.4%) |
7 "Long"
and 6 "Short" |
|
June 20, 2008 |
S&P 500 |
60-day |
+113 points (+8.5%) |
4 "Long"
and 2 "Short" |
|
June 13, 2008 |
S&P 500 |
60-day |
+108 points (+8.1%) |
4 "Long"
and 2 "Short" |
|
June 6, 2008 |
S&P 500 |
15-day |
+47 points (+3.4%) |
7 "Long"
and 10 "Short" |
|
May 30, 2008 |
S&P 500 |
60-day |
+201 points (+15%) |
4 "Long"
and 3 "Short" |
|
May 23, 2008 |
S&P 500 |
60-day |
+222 points (+16%) |
3 "Long"
and 4 "Short" |
|
May 16, 2008 |
S&P 500 |
60-day |
+243 points (+18%) |
4 "Long"
and 3 "Short" |
|
May 9, 2008 |
NASDAQ 100 |
10-day |
+97 points (+5.1%) |
10
"Long" and 10 "Short" |
|
May 2, 2008 |
S&P 500 |
15-day |
+31 points (+2.2%) |
7 "Long"
and 9 "Short" |
|
April 25, 2008 |
S&P 500 |
60-day |
+251 points (+18%) |
7 "Long"
and 8 "Short" |
|
April 18, 2008 |
S&P 500 |
15-day |
+91 points (+6.6%) |
3 "Long"
and 3 "Short" |
|
April 11, 2008 |
S&P 500 |
15-day |
+39 points (+3.0%) |
4 "Long"
and 5 "Short" |
|
April 4, 2008 |
NASDAQ 100 |
5-day |
+93
points (+5.2%) |
7 "Long" and 6 "Short" |
|
March 28, 2008 |
S&P 500 |
60-day |
+29
points (+2.1%) |
6 "Long" and 7 "Short" |
|
March 20, 2008 |
S&P 500 |
5-day |
+53
points (+4.2%) |
3 "Long" and 4 "Short" |
|
March 14, 2008 |
S&P 500 |
5-day |
+77
points (+6.0%) |
6 "Long" and 5 "Short" |
|
March 7, 2008 |
S&P 500 |
60-day |
+222 points (+15%) |
9 "Long"
and 9 "Short" |
|
Febr. 29, 2008 |
S&P 500 |
60-day |
+211 points (+14%) |
8 "Long"
and 8 "Short" |
|
Feb. 22, 2008 |
S&P 500 |
15-day |
+85 points (+6.4%) |
4 "Long"
and 5 "Short" |
|
Feb. 15, 2008 |
S&P 500 |
60-day |
+211 points (+15%) |
7 "Long"
and 7 "Short" |
|
Feb. 8, 2008 |
S&P 500 |
60-day |
+214 points (+14%) |
6 "Long"
and 6 "Short" |
|
Feb. 1, 2008 |
S&P 500 |
60-day |
+246 points (+17%) |
5 "Long"
and 5 "Short" |
|
Jan. 25, 2008 |
S&P 500 |
60-day |
+330 points (+20%) |
5 "Long"
and 5 "Short" |
|
Jan. 18, 2008 |
S&P 500 |
60-day |
+330 points (+22%) |
4 "Long" and 5 "Short" |
|
Jan. 11, 2008 |
S&P 500 |
60-day |
+309 points (+21%) |
5 "Long" and 5 "Short" |
|
Jan. 4, 2008 |
S&P 500 |
60-day |
+291 points (+20%) |
4 "Long" and 5 "Short" |
|
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