Ok, all those paper trades from last two days?

Toss em. Ive been working on things in regards to how to use this chart, and its been pretty hard which is why Ive been so spotty with this blog, but I think I got a handle on it now. Let me go through with you what I have been working on. Here is a chart of the last few days with the indicators I have been working on.

I have a few points on here circled, with corresponding lines correlated to the chart. Here is how I figured that I would use this.
The backbone of this is the RSI indicator, that is the indicator in the pink strip below the main chart. It has the yellow circles in it with the letters that I annotated A,B,C,D,E, and F.
So before anything else, I am watching the RSI. When the RSI indicator hits the top or the bottom of the pink zone that is time to trade. Its action time. These times have been circled in yellow. Lets look at time A for example. The RSI hit the top of the pink zone on the indicator. All things being equal that means that the stock will top out and reverse and come back down from this point on. Now look at the yellow line I drew straight up from the circle. This yellow circled peak in the RSI correlates exactly to this point in the candlestick chart of QQQ, which here would be at about 10:35am central time. We go for it and open a put option trade on the QQQ.
However, we are looking for affirmation with the blue arrows/red arrows.
Looking at the main chart, you will notice that the red arrows are pointed down above the 5minute candle timing bars, and the blue arrows are below the line. If you only see a red arrow and no blue arrow, that means that the stock will go down. If you see a red arrow above and a blue arrow below, you then have to figure out which is first, or skewed to the right or left slightly in respect to the other arrow. See the chart below:

It is drawn by hand on the computer with a mouse, but it illustrates my point. There should be no more than a three bar space between arrows or else that means that arrow is probably just by itself, like the blue arrow all the way to the left above. And that blue arrow means up. When you see two arrows close to each other, one above and one below, look at them closely. If one is slightly before the other one, the second arrow will foretell the direction. In the second grouping on the left above, you see a blue arrow and a red arrow close to each other within three bars of each other. First is the red arrow, meaning down. But within three bars, a blue arrow shows up, this means up. So you purchase a call. You let things ride until you see a red arrow like at the top of the chart and within three bars you see it is alone, so you exit your call and purchase a put and let that go down. On the right of the above chart, two arrows again. But which is skewed a bit to the left (which is first time-wise as the bars go from left to right as they are real time 5 minute bars) and which one is skewed a bit to the right, or second. The red bar is a bit to the right, that takes dominance over the earlier blue arrow, so that means the chart is going to go down.

This is what I am going to be doing. I will fade the gap in the morning like I did this morning, and using the above charting to make about 2 or three more plays in the day including my end of day trade.

Its a work in progress, but I am getting good fast.

Tradinginsider