Directional Credit Spread Strategy For ThinkOrSwim

[agorena123]

@watale - I believe you need a margin account to do spreads

@easyman - I use the default 21, but am not actively trading the system right now, I did have good success with the system but often had terrible entries and a couple stocks hit the 2nd or 3rd deviation and kept going. I'm working on adding a shorter term 5 or 15min indicator to give me better entries

 

[easyman]

@watale - I believe you need a margin account to do spreads

@easyman - I use the default 21, but am not actively trading the system right now, I did have good success with the system but often had terrible entries and a couple stocks hit the 2nd or 3rd deviation and kept going. I'm working on adding a shorter term 5 or 15min indicator to give me better entries

Thanks a lot ... appreciate it..

I found that there is NOT much entries ... that too in hourly ... and you are correct ... you risk really .50c per contract but the risk is $2.00 ( for 2.50 spread)

 

[barbaros]

You know I use this exact system for the past year but with signals off a daily chart. Its not perfect but win rate is pretty good. I would say about 70-80%. Not sure how you would improve on the entry signal but maybe to see if the RSI or MACD starts to cross up or down before you take it. I will try out the hourly signal as you have it as I think it can generate plays that are shorter in time but suggest you also look at doing off the daily as these would be higher probability of success given its stretched on a longer time frame.

Can you describe your system off daily charts?

 

[Tradervic]

Can you describe your system off daily charts?

hey @barbaros, apologies....just saw your question. Its basically the same except I use 195 bars for the length for the StandardDevChannel. The SD will be 1,2,and 3. I plot them on a 195 minute chart, which is 1/2 of a trading day. I take trades if price closes above or below 1.5SD, add to them when it goes above or below 2SD. Not perfect but High winning percentage. This is a longer term trade compared to the one Agorena posted as his is based on 1 hour timeframe.

 

[bobbiearias]

I've wanted to learn trading for a long time, but I don't even know where to start. I have seen a lot of different strategies on the Internet. I read them very carefully, but I understood very little. My close friend told me that some successful traders sell their courses and teach everything they know. I got interested in this idea, and I am thinking of borrowing money through the https://kviklanet.dk/laan-penge/ and buying a prosperous trader's course. Do you think this is a wise investment for the future? I have my doubts.

 

[Thomas]

I've wanted to learn trading for a long time, but I don't even know where to start. I have seen a lot of different strategies on the Internet. I read them very carefully, but I understood very little. My close friend told me that some successful traders sell their courses and teach everything they know. I got interested in this idea, and I am thinking of borrowing money through the https://kviklanet.dk/laan-penge/ and buying a prosperous trader's course. Do you think this is a wise investment for the future? I have my doubts.

Have your doubts,......Stockbee, SolidTrades,

 

[JoeSD]

Yeah man I also have developed a look back regression channel for whatever time frame you like with two deviation channels if you want to look at a certain number of bars, its not my code I just added two std dev.

# LRC no Lines Global Color Adj
# With help from coder in TOS chat support 9-18-2020
# Originally: tradingview like Linear Channel w/ fills
# @JonPM Community Request in useThinkscript
# VERSION
# 2020.09.08 V1.0 @diazlaz - Linear Regression Channel with Cloud and variable
#                            timeframe.
# 2020.09.18 V1.1 @markos - Color Opacity can now be changed via Globals in UI.

input price = close;
input deviations = 1.0;  #set your deviation units here.
input deviations2 = 2.0;  #set your deviation units here.
input length = 80; #set your channel lookback period here.

def regression = InertiaAll(price, length);
def stdDeviation = StDevAll(price, length);
plot UpCloud = regression + deviations * stdDeviation;
plot DnCloud = regression - deviations * stdDeviation;
def UpCloud2 = (regression + deviations2 * stdDeviation);
def DnCloud2 = (regression - deviations2 * stdDeviation);
def MiddleLine = regression;


DefineGlobalColor("Bullish2", Color.LIGHT_GREEN);
DefineGlobalColor("Bearish2", Color.LIGHT_RED);

UpCloud.setdefaultColor(Color.white);
dnCloud.setdefaultColor(Color.white);
AddCloud(MiddleLine,  UpCloud2,  GlobalColor("Bullish2"),  GlobalColor("Bullish2"));
AddCloud(MiddleLine,  DnCloud2,  GlobalColor("Bearish2"),  GlobalColor("Bearish2"));
# End LRC wo Lines

@germanburrito - what do you mean by

"Yeah man I also have developed a look back regression channel for whatever time frame you like with two deviation channels if you want to look at a certain number of bars, its not my code I just added two std dev."

and how is this different from STD Dev channels? Thanks, Joe

 

[JoeSD]

hey @barbaros, apologies....just saw your question. Its basically the same except I use 195 bars for the length for the StandardDevChannel. The SD will be 1,2,and 3. I plot them on a 195 minute chart, which is 1/2 of a trading day. I take trades if price closes above or below 1.5SD, add to them when it goes above or below 2SD. Not perfect but High winning percentage. This is a longer term trade compared to the one Agorena posted as his is based on 1 hour timeframe.

@Tradervic - you still doing this strategy? How is it going if so? Tx. Joe

 

[Tradervic]

@Tradervic - you still doing this strategy? How is it going if so? Tx. Joe

Joe: Its a great indicator. Its not 100% but more like 75% accurate. I only use it on 195 minute chart, only on major liquid stocks and I use it to do credit spreads. I stop out at 2 times the credit I received. Try it, and let us know how you like it.

 

[JoeSD]

Joe: Its a great indicator. Its not 100% but more like 75% accurate. I only use it on 195 minute chart, only on major liquid stocks and I use it to do credit spreads. I stop out at 2 times the credit I received. Try it, and let us know how you like it.

@Tradervic, Yes I may try it out on the 195M. How do you scan for candidates at that time frame if you know? Tx.

 

[Tradervic]

@Tradervic, Yes I may try it out on the 195M. How do you scan for candidates at that time frame if you know? Tx.

You just scan for stocks that have exceeded the 2 SD channel. Then look for some confirmation on another indicator to gauge likelihood of snap back. I did a trade on COO this week and it had a nice bounce off the lows.

 

[klo123]

@Tradervic
For the scan what time frame do you select? I don't think you can customize TOS to scan for 195M? Do you use 4 hours instead ? and for your chart do you include after hour trading ?

 

[apdusp]

maybe i am not aware if this was posted in this thread but, when, specially if things go south, do you exit the credit spread? what kind of criteria is used?

 

[Godbet]

You know I use this exact system for the past year but with signals off a daily chart. Its not perfect but win rate is pretty good. I would say about 70-80%. Not sure how you would improve on the entry signal but maybe to see if the RSI or MACD starts to cross up or down before you take it. I will try out the hourly signal as you have it as I think it can generate plays that are shorter in time but suggest you also look at doing off the daily as these would be higher probability of success given its stretched on a longer time frame.

Hello. Are you still using this strategy? I have paper traded it using 2D as my trigger. So far, I have had good success. If you are still trading this...have you "tweaked" it to get better entries/exits? Thanks.

@watale - I believe you need a margin account to do spreads

@easyman - I use the default 21, but am not actively trading the system right now, I did have good success with the system but often had terrible entries and a couple stocks hit the 2nd or 3rd deviation and kept going. I'm working on adding a shorter term 5 or 15min indicator to give me better entries

Hello. Are you still using this strategy? I have paper traded it using 2D as my trigger. So far, I have had good success. If you are still trading this...have you "tweaked" it to get better entries/exits? Thanks.