This week's SBV chart example is based on the 15-day SBV(16) S&P 500 chart.

+15 points on the S&P 500

1 point on S&P 500 = $50 on 1 E-mini S&P 500 futures contract

10 points on S&P 500 = $5,000 on 10 E-mini S&P 500 contract

40 points on S&P 500 = $20,000 on 10 E-mini S&P 500 contracts

Chart 1. Relationship between the SBV Oscillator and
index reversal points. S&P 500 index. 15-day view. 1 bar = 15 min. SBV(16)

It's Simple and profitable

In our trading example, we applied the following simple system which is based on our SBV indicator:

1.  Once the SBV indicator has fallen below a negative signal level (the indicator will now show red), we will enter a short position (if we are not already short);
2.  Once the SBV indicator has advanced above a negative signal level (after having been below that level), we will enter a long position (the indicator still shows red);
3. Once the SBV indicator has rallied above a positive signal level (the indicator will now show green), we will enter a long position (if we are not already long);
4.  Once the SBV indicator has fallen below a positive signal level (after having been above that level), we will enter a short position (the indicator still shows green);
5.  Additional Stop Loss Rule - If the SBV had dropped into negative territory and has begun to rise without having hit the signal line, close the short position when the SBV is back in positive territory, and stay in cash until a new signal appears.
   
   Do the opposite for a long position: if the SBV had moved into positive territory and has begun to decline without having hit the positive signal line, close the long position when the SBV is back in negative territory, and stay in cash until a new signal appears.

Detailed system description with explanation of used rules could be found in our "SBV Trading System" tutorial.