SPX Trading Strategy for ThinkorSwim

[Jim C]

@Jim C The [1] means previous candle/bar, [-1] means look to the next candle/bar, and if used [0] means current candle/bar for whatever variable or price you are referencing... When this index is omitted, the current candle/bar is used...

Thank you I ended up looking in ToS and figuring it out.

 

[UncleTerry]

@Hypoluxa ive been noticing a lot of chop lately and reversals after a signal from the macd dots last week, have you been noticing the same?

 

[Lukhy11]

@Hypoluxa Can you share your setup that you have like in post#181 with a share link for thinkorswim? Thx.

 

[Hypoluxa]

@Hypoluxa ive been noticing a lot of chop lately and reversals after a signal from the macd dots last week, have you been noticing the same?

yes I have...so much so that I continue to tweak SPX even more. Setups are pretty solid for a couple of months, then I always see a change happening as market conditions change.

 

[Hypoluxa]

@Hypoluxa Can you share your setup that you have like in post#181 with a share link for thinkorswim? Thx.

I'm going to monitor this setup again this week to make sure its as good as I think it is....then I'll post the final version with any tweaks made....if needed.

 

[barbaros]

I'm going to monitor this setup again this week to make sure its as good as I think it is....then I'll post the final version with any tweaks made....if needed.

Your first setup still looks pretty good.

 

[tom23824]

Hello everyone and Happy New year! I've come across another strategy that I wanted to share with you guys for SPX only.

Setup:

• 10 Min chart
• Heikin Ashi candles
• SMA 3/9
• MACD Bollinger Bands (the one Ben has posted on here a while back) 8,16,36 and uncheck "show plot" on the BB upper, BB lower and BB mid line. You will only be using the zero line, MACD dots and MACD Line for entry purposes. The inputs of "b length" and "bb num dev" are irrelevant here since you will remove the the plots that I mentioned.
• ErgodicOsc 2,10,36 (changed the default negative to red)

Option call logic:
1. The SMA's have to cross first.
2. For a call opportunity, you will then wait to see if the MACD dots cross above the MACD zero line. Its critical here to wait until one dot has cleared the zero line...you MUST see a gap....never enter with the dot on the line. Dots must be consistent as well...if its going up...then they must all be white...if a red dot populates between the time a white dot hits the zero line and the time one crosses clear....don't enter. I have a screenshot below showing this example - 13:00 a red dot appears.
3. The ErgodicOsc HAS to be green when the MACD dot crosses above the zero line. You can hold the trade most of the time until this turns from green to red....but I always set a sell limit just in case it whips back in the opposite direction.

Option put logic:
Obviously its the complete opposite of what I've described above for a call. BUT - the SMA's still have to cross first.

I backtested this 90 days and it came back with 95 opportunities. 75 were positive and 20 were breakeven or didn't move more than $1-$2 on the next candle before it changed to the opposite color candle.

For the positives, SPX only needs to move a minimum of $3 for the option premium to move to quick and decent profit. I generally buy 10 contracts with a delta of at least .35 or higher. So there were 75 times the past 90 days that SPX moved $3 or more (up or down) to be claimed a positive for me.

FYI - Since SPX doesn't begin trading until the opening bell, make sure you have your chart set to at least 1 day/10 mins. The 1 day will allow you to get a clear view of the chart and indicators, otherwise it will fill your entire screen if you use current day.

There's 2 opportunities on the attached screenshot: a put at 11:20 and a call at 14:10.

I hope those of you that trade SPX have the same success and feel free to ask questions regarding this strategy.

@Hypoluxa Thank you for your system and strategy.
I setup SPX chart as per the rules. I notice on today's chart there is a short trade.
Would you take short at the close of the candle on red vertical line(15:10) OR at the close of the candle on yellow vertical line (15:20)?

How do I insert a pic of the chart?

 

[rad14733]

@tom23824 For posting images, please refer to How to insert image in a post thread?...

As for when the entry would have been made, based on the 1st post in this topic, it would have been at 15:20 when there was a noticeable gap between the TS_MACD_BB dot and zeroline... That's my interpretation and @Hypoluxa will reply if his entry would have been different...

 

[Hypoluxa]

@tom23824 @rad14733 15:20 is the correct time/signal.

 

[tom23824]

@tom23824 @rad14733 15:20 is the correct time/signal.

Thanks guys! @Hypoluxa @rad14733

Got profit on this. But did I get the correct time/signal?
.
.

Buy to Open order never filled. Did I identify the correct time/signal?
.
Question:
I am using LIMIT BuyToOpen order for the option. Do you use MARKET orders?
How do you price the option right at the very moment the SPX candle closes?
.
For the setup at 14:00, I lost valuable time trying to evaluate the LIMIT order price.
.
One change I made to my Flexible grid, is to add chart to the option AT ladder grid. I hope this helps me next time!
Weird stuff is I cannot get the open position size on the AT ladder.
.
Looks like there can be lot of draw down or whipsawing on active position? Am I right?

 

[Hypoluxa]

Thanks guys! @Hypoluxa @rad14733

Got profit on this. But did I get the correct time/signal?
.
.

Buy to Open order never filled. Did I identify the correct time/signal?
.
Question:
I am using LIMIT BuyToOpen order for the option. Do you use MARKET orders?
How do you price the option right at the very moment the SPX candle closes?
.
For the setup at 14:00, I lost valuable time trying to evaluate the LIMIT order price.
.
One change I made to my Flexible grid, is to add chart to the option AT ladder grid. I hope this helps me next time!
Weird stuff is I cannot get the open position size on the AT ladder.
.
Looks like there can be lot of draw down or whipsawing on active position? Am I right?

As stated in my original post...and i cant stress enough one cleared dot either over the MACDBB zero line for a call or one cleared dot below the MACDBB zero line for a put. The dots wont always move in a straight line either...so watch for it going sideways from time to time before it moves upwards more.

 

[rad14733]

@tom23824 Personally, that first image wouldn't be a valid signal for me because I only base a crossover signal, not a pullback... The second image does show a valid signal to enter a Long or Call...

I manually enter all of my Option trades via Active Trader and I either set my entry price between Bid and Ask or at the Market if the ladder is climbing fast... But I won't chase price very far for an entry... I only attempt to place an order after the planets align for the underlying, such as how @Hypoluxa described in his 1st post of this topic when using this strategy... I've never had much luck using Conditional Orders, mainly because I scalp and day trade...

 

[tom23824]

As stated in my original post...and i cant stress enough one cleared dot either over the MACDBB zero line for a call or one cleared dot below the MACDBB zero line for a put. The dots wont always move in a straight line either...so watch for it going sideways from time to time before it moves upwards more.

oh! lol! I got away that time, isn't it!
.
so valid signals have to have dotted line to cross over/under MACDBB zero line?

 

[tom23824]

@tom23824 Personally, that first image wouldn't be a valid signal for me because I only base a crossover signal, not a pullback... The second image does show a valid signal to enter a Long or Call...

I manually enter all of my Option trades via Active Trader and I either set my entry price between Bid and Ask or at the Market if the ladder is climbing fast... But I won't chase price very far for an entry... I only attempt to place an order after the planets align for the underlying, such as how @Hypoluxa described in his 1st post of this topic when using this strategy... I've never had much luck using Conditional Orders, mainly because I scalp and day trade...

Thanks for the tip on the entry price. I have to get comfortable with AT and options.
Once you have an active option position, with OPRA in the symbol table of the AT, does your AT grid display quantity in "Pos Long" field or/and in "B/S" field? Mine did not show the open/active option quantity. May be I am doing something wrong or must be missing something.

 

[rad14733]

@tom23824 I have the Summary section of the Active Trader panel turned off as I use the Current account positions Watchlist for monitoring my active trades and like the compactness of having it hidden... I don't recall whether option contract position size displays displays or not as I've had the summary turned off for quite some time...

 

[Trader_Rich]

@rad14733 @Hypoluxa have you guys looked at putting "dead zones" on your TS_MACD_BB, Ergodic, and Didi Index? I know I'm using this set up different than the way Hypoluxa intended, but when I made some minor modifications and put the dead zones in this set up became lethal. My modified chart is below. If I could just set up Renko alerts now I'd be on cloud nine

https://tos.mx/oZox0W3

 

[rad14733]

@Trader_Rich I have deadzone lines on my custom ErgodicOsc but I never used them, as is the case with most of my indicators... The only indicator I still use the deadzone line on is Waddah_Attar_Explosion...

As for Renko Alerts, here is a separate Study that I dug out... I started with a lower indicator and modified it into an upper... I haven't used it in about a year, so no guarantees on performance...

#Renko_Alerts
def IsUp = close > open;
def IsDown = close < open;
def avgRange = 0.05 * Average(high - low, 20);


#Brick change from Up to Down(alert sounds at the open of the first brick)

plot UpToDownTrgOpen = IsUp[1] and IsDown[0];
UpToDownTrgOpen.SetPaintingStrategy(PaintingStrategy.BOOLEAN_POINTS);
UpToDownTrgOpen.SetDefaultColor(CreateColor(255, 0, 0));
AddLabel(UpToDownTrgOpen, "TREND CHANGE", if UpToDownTrgOpen then Color.RED else color.current);
Alert(UpToDownTrgOpen, "sell signal", Alert.BAR, Sound.Ding);


#Brick change from Up to Down(alert sounds at the close of the first brick)

plot UpToDownTrgClose = IsUp[1] and IsDown[0];
UpToDownTrgClose.SetPaintingStrategy(PaintingStrategy.BOOLEAN_POINTS);
UpToDownTrgClose.SetDefaultColor(CreateColor(255, 0, 0));
AddLabel(UpToDownTrgClose[1], "TREND CHANGE", if UpToDownTrgClose[1] then Color.RED else color.current);
Alert(UpToDownTrgClose[1], "sell signal", Alert.BAR, Sound.Ding);


#Brick change from Down to Up(alert sounds at the open of the first brick)

plot DownToUpTrgOpen = IsDown[1] and IsUp[0];
DownToUpTrgOpen.SetPaintingStrategy(PaintingStrategy.BOOLEAN_POINTS);
DownToUpTrgOpen.SetDefaultColor(CreateColor(0, 255, 0));
AddLabel(DownToUpTrgOpen, "TREND CHANGE", if DownToUpTrgOpen then Color.GREEN else color.current);
Alert(DownToUpTrgOpen, "buy signal", Alert.BAR, Sound.Ding);


#Brick change from Down to Up(alert sounds at the close of the first brick)

plot DownToUpTrgClose = IsDown[1] and IsUp[0];
DownToUpTrgClose.SetPaintingStrategy(PaintingStrategy.BOOLEAN_POINTS);
DownToUpTrgClose.SetDefaultColor(CreateColor(0, 255, 0));
AddLabel(DownToUpTrgClose[1], "TREND CHANGE", if DownToUpTrgClose[1] then Color.GREEN else color.current);
Alert(DownToUpTrgClose[1], "buy signal", Alert.BAR, Sound.Ding);

 

[king_louie]

@Hypoluxa @rad14733 @tom23824 @Trader_Rich

SPX entry at 740AM PT would've been a HUGE winner and I missed it due to work!! ARGH!

 

[rfb]

@Hypoluxa @rad14733 @tom23824 @Trader_Rich

SPX entry at 740AM PT would've been a HUGE winner and I missed it due to work!! ARGH!

Hi @samoya, I'll answer your first post first:

1. The 3 rectangles you have don't show a cross over on the zero line from lower to upper...so I don't take those trades. However... I have seen many examples where the red dots are ABOVE the zero line in the "green area" and the red dots come all the way down and then bounce off the green zero line and switch back to white as it moves back up....those can be profitable trades as well. But currently I'm only trading the true and clear crossovers.

2. As far as length of trade, I set a sell limit for $1 over the premium purchase price, as I scalp options...not a long holder of them. So I don't wait for an exit signal...unless its swinging back quick and common sense tells me to get out. But with this logic/setup....you can almost guarantee 75 cents to a $1 premium increase.

3. I spend a great deal of time adjusting the indicator settings for one particular stock until I see positive consistency with it....then I backtest it 90 days.

4. I buy a minimum of 10 contracts consistently... the minimum delta for me is .35 cents...sometimes that's ITM and sometimes not.
Yes, this is a great setup for SPX only...but I'm now looking at AMZN as well to see how it reacts to it.

@Hypoluxa

Hi all. New member here and just started looking at the wealth of information on this site. Thank you Hypoluxa for your efforts. Been reviewing this thread and all those that have contributed. I'm in the early watching and learning stages. The indicators for this strategy seem pretty consistent. A nice trader's edge if you will. Quick question and my apologies if I missed it, but how far out are you placing the option trades? Current week or following? I get the .35 delta, but was wondering the length of time out. Thanks again!

 

[rad14733]

@king_louie I had an entry signal on my other chart setup @10:15 and on this setup @10:40...