SPX Trading Strategy for ThinkorSwim

[Hypoluxa]

# Source code for True Momentum Oscillator

# TMO ((T)rue (M)omentum (O)scilator)
# Mobius
# V01.05.2018
# hint: TMO calculates momentum using the delta of price. Giving a much better picture of trend, tend reversals and divergence than momentum oscillators using price.

declare Lower;

input length = 14;
input calcLength = 5;
input smoothLength = 3;

def o = open;
def c = close;
def data = fold i = 0 to length
with s
do s + (if c > getValue(o, i)
then 1
else if c < getValue(o, i)
then - 1
else 0);
def EMA5 = ExpAverage(data, calcLength);
plot Main = ExpAverage(EMA5, smoothLength);
plot Signal = ExpAverage(Main, smoothLength);
Main.AssignValueColor(if Main > Signal
then color.green
else color.red);
Signal.AssignValueColor(if Main > Signal
then color.green
else color.red);
Signal.HideBubble();
Signal.HideTitle();
addCloud(Main, Signal, color.green, color.red);
plot zero = if isNaN(c) then double.nan else 0;
zero.SetDefaultColor(Color.gray);
zero.hideBubble();
zero.hideTitle();
plot ob = if isNaN(c) then double.nan else round(length * .7);
ob.SetDefaultColor(Color.gray);
ob.HideBubble();
ob.HideTitle();
plot os = if isNaN(c) then double.nan else -round(length * .7);
os.SetDefaultColor(Color.gray);
os.HideBubble();
os.HideTitle();
addCloud(ob, length, color.light_red, color.light_red, no);
addCloud(-length, os, color.light_green, color.light_green);
# End Code TMO

At times this follows the MACDBB...but there are times, the past 10 days at least, this crosses over the TMO center line, while MACDBB is going sideways above the zero line or sideways below.....these weren't good moves when it was like that. The MACDBB would've kept you out of those trades.

 

[Hypoluxa]

FYI everyone - This past week this setup as it is, went 7-1 for SPX.

 

[QUIKTDR1]

I used your settings 3.10,36 yes same as in TOS

 

[Hypoluxa]

I used your settings 3.10,36 yes same as in TOS

I was asking for HULL settings. Default settings?

 

[QUIKTDR1]

I used MACD with your settings 3,10,36 with the Hull settings in TOS

 

[iamshadowx]

@Hypoluxa sorry I am new here, when you said the wait until the SMA's cross, do you mean the stock price crosses above both SMA lines? also, how can I use this for 0DTE credit spreads for SPX ?

 

[Hypoluxa]

@Hypoluxa sorry I am new here, when you said the wait until the SMA's cross, do you mean the stock price crosses above both SMA lines? also, how can I use this for 0DTE credit spreads for SPX ?

You need the 3 and 9 SMA’s to cross over each other. Once that intersection happens, you need to wait for the MACDBB signal - going either up over or down below the zero line.
I can’t answer your other question, I’ve only purchased naked calls and puts every time.

 

[2pointcorrelation]

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.

What does "delta" mean in your post?

I am reading this thread all day long, on my first day of entering this forum. Thank you for sharing this strategy and many explanations.

 

[Hypoluxa]

@Hypoluxa.

What does "delta" mean in your post?

I am reading this thread all day long, on my first day of entering this forum. Thank you for sharing this strategy and many explanations.

https://www.investopedia.com/terms/d/delta.asp

 

[rad14733]

@Hypoluxa.

What does "delta" mean in your post?

I am reading this thread all day long, on my first day of entering this forum. Thank you for sharing this strategy and many explanations.

Delta is one of the "Option Greeks" and it is a measure of how much an Options price will increase for every dollar that the underlying symbol increases in price...

Posted as @Hypoluxa was posting the link above...

 

[iAskQs]

Hypoluxa and others interested,​

Instead of Ergonomic I have been analyzing MACD 3,10,36 (your settings) with the Hull average type and it appears to offer earlier signals to your wonderful post. Let me know if you all see a possible advantage.

Based on @Hypoluxa's posts here, I thought the setting for macd were 8,16, 36. Did I misunderstand something?

 

[iAskQs]

Been using 3 min, 5 min and 10 min charts. Interesting to note, I've been seeing some intraday divergences ( 3 and 5 min) with several indicators (RSI and Stochastics) when price gets extended from the moving averages, whether up or down. I'll try the 2 min as well next week.

Do you use different indicator settings for those time frames? I'm using the suggested settings on 5 min. charts.

 

[rfb]

Do you use different indicator settings for those time frames? I'm using the suggested settings on 5 min. charts.

Initially I tried a few different settings on the 3 and 5 min charts, but as @Hypoluxa said on several occasions, the settings are most consistent on the 10 min chart. Been looking at other indicators as mentioned before while keeping the suggested settings.

 

[2pointcorrelation]

Hi @Hypoluxa @rad14733

Thank you for the explanation of delta. I am new to option trading. Recently tested 89 long call contracts on 20-ish stocks, DTE = 2 to 3 weeks, all near money calls. The results are 63% positive but the total return is -0.9%. Apparently I didn't control risk well. Is there resource in this forum to explain how to calculate risk and award based on delta, IV, etc.?

 

[rad14733]

Hi @Hypoluxa @rad14733

Thank you for the explanation of delta. I am new to option trading. Recently tested 89 long call contracts on 20-ish stocks, DTE = 2 to 3 weeks, all near money calls. The results are 63% positive but the total return is -0.9%. Apparently I didn't control risk well. Is there resource in this forum to explain how to calculate risk and award based on delta, IV, etc.?

Perhaps if you were to explain how you are entering and exiting trades, with risk control, we could be of further assistance... Any images of trades on charts would also be beneficial... I honestly don't see how having a 63% success rate could result in a negative profit...

 

[Hypoluxa]

Hi @Hypoluxa @rad14733

Thank you for the explanation of delta. I am new to option trading. Recently tested 89 long call contracts on 20-ish stocks, DTE = 2 to 3 weeks, all near money calls. The results are 63% positive but the total return is -0.9%. Apparently I didn't control risk well. Is there resource in this forum to explain how to calculate risk and award based on delta, IV, etc.?

YouTube has a ton of videos that might be more helpful for you, rather than trying to explain via a lot of posts. Since you know what your concern and issues are....maybe this video will help you:

 

[beachbum]

Hello,
I was wondering if anyone can help me out with probably a simple task. I just want to set up an alert which will alert me when the MACD Bollinger indicator switches from a red to a white point or vice versa. Thanks for any help. Great strategy btw. I have it saved in my study sets as “Darth Vader”. Thanks in advance for any help!

 

[Hypoluxa]

Hello,
I was wondering if anyone can help me out with probably a simple task. I just want to set up an alert which will alert me when the MACD Bollinger indicator switches from a red to a white point or vice versa. Thanks for any help. Great strategy btw. I have it saved in my study sets as “Darth Vader”. Thanks in advance for any help!

That’s awesome!

 

[iamshadowx]

Hello,
I was wondering if anyone can help me out with probably a simple task. I just want to set up an alert which will alert me when the MACD Bollinger indicator switches from a red to a white point or vice versa. Thanks for any help. Great strategy btw. I have it saved in my study sets as “Darth Vader”. Thanks in advance for any help!

Would love to have a sound when the indicator fires to buy/sell

 

[2pointcorrelation]

@Hypoluxa

The video is good. Thank you again!