Pattern based trading system for Index Futures. Trade Setup examples with screen, chart, indicator and book trader settings.

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1 Trade Setup examples with screen, chart, indicator and book trader settings. NT Triple screen setup with 3 separate time frame charts, Time and Sales, and Interactive Broker s Book Trader for Hotkey order entry. NT Indicators: (n) Tick Candle Chart 3x(n) Tick Candle Chart 5 minute Candle Chart B/S Volume B/S Volume B/S Volume and/or Volume Ultimate Osc. Ultimate Osc. Ultimate Osc ATA ATA ATA Prior OHLC Prior OHLC Prior OHLC ADX Pivots Time and Sales: Used for order flow confirmation of entries and exits Use of Indictors: B/S Volume used to look for confirmation to the next pivot move Volume only used to see activity level and occasionally confirm peak volumes. Ultimate Oscillator. - Used to find areas where divergence between price and indicator exist to add probability to the trades. In most cases we prefer to have both the (n) tick and the 3x (n) tick showing divergence. ATA used to identify pivotal levels Prior OHLC Used to identify daily range boundaries ADX Used to measure trend strength (+5 = strong) Pivots be aware of the daily pivots as price will become choppy and stops will be run. Strategy All Markets: Let the market establish its daily range by observing the open and where price travels too. Most generally price will travel toward the previous days, or session s highs and lows. Use the 5 minute chart for this. Use the levels as targets. Look for simple chart patterns that offer a low risk entry where reward can be 5 times or more great than risk. Most chart patterns can be identified on the LT tick chart and then the ST tick chart can be used to judge the entry. There are occasions however, when the ST tick chart will yield good patterns as well. The most common patterns are wedges, flags, bottoms and tops. Use the OHLC of the previous day, as well as today s open to determine target areas for price to move toward as well as the last high or low. Buy pullbacks or sell bounces in the trend direction using small flags and wedges. Use the Oscillator to confirm the trade with divergence. Use the ADX to avoid counter trend trading and only enter in the direction of a strong trend. When it reads over 5 the trend is strong. Use the B/S volume and the time and sales to confirm entries and exits as well as highlight areas where trade setups may occur, i.e. after a selling climax a double bottom appears with divergence or after a buying climax a double top or higher high appears with divergence.

2 Pattern based trading system for Index Futures Use the market times and the volume indicator to make sure you are trading during a period of adequate liquidity. Ensure that transactions are being filled quickly without price gaps. Choppy action occurs when not enough market participants are interacting and the algorithms are making the market, causing gaps and running stops. Look for volumes greater than what occurs during the lunch break. Typically volumes should be x higher than lunchtime to have good order flow and smooth price movement. Asian Markets morning session MHI Mini Hang Seng. 0 HKD / Point contract ite=ib&conid= &detlev=&sess= Triple Screen setup with 5 tick, 50 tick and a 5 minute chart. -Best time to trade is 30 minutes after the open, once ranges have been tested, until :00 noon. Approaching noon price can become range bound and choppy. Refer Market times spreadsheet for Prime Times ATA and Book Trader Settings: Contract MHI EBD EES EPT ESD EVL ST Tick 5 4 LT Tick min 4 IB Book Trader Settings Order Bid/Ask No. contracts Buy the Bid Sell the Ask Offset Limit +/- 5 Example Prior Low test with volume spikes and divergence: Stop -0 0 Target 40-40

3 Example Prior Low break and retest entry for a 70 point move SPI Australian S&P ASX 00 Share Price Index Futures 5 AUD / Point Contract ite=ib&conid=76370&detlev=&sess= Triple Screen setup with 60 tick, 50 tick and a 5 minute chart. -Best time to trade is 30 minutes after the open, once ranges have been tested, until :00 noon Sydney time. Approaching noon price can become range bound and choppy. Refer Market times spreadsheet for Prime Times. ATA and Book Trader Settings: SPI min IB Book Trader Settings EBD Order Bid/Ask No. contracts Stop Target EES Buy the Ask -4 0 EPT Sell the Bid 4-0 ESD Offset Limit +/- 0 EVL

4 Example H&S top with divergence Example Double Bottom at retest of the open with Divergence

5 Asian Markets afternoon session Example

6 European Market morning session DAX DAX 30 INDEX (DEUTSCHE AKTIEN XCHANGE 30) 5 EUR / half point tick Contract ite=ib&conid=856044&detlev=&sess= Example Example

7 Example 3 Example 4

8 Pattern based trading system for Index Futures Example 5 5 min chart 68 tick chart retest on the way, possibly an entry opportunity Example 6 of above con t Retest and then short for 4 points Example 7