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Pitbull Three Strategy


Here is a strategy which I did not originate. Perhaps some of you have seen or heard about various forms of this. It was taught to me by a self proclaimed “old Timer” who I happened to meet about 5-7 years ago in a commodity site chat room. This was before Paltalk and Hotcomm was popular. I present it here mostly as it was taught to me for free. I “watched” him trade this for about 9 months in real time. It was designed for the big S&P contract so I have modified it slightly for the emini. The man who taught this was gruff, sometimes abusive ( especially when the future vendor Kingfish came in the room) but always answered questions…

Originally I thought he was going to turn out like the Army Sargent played by Lou Gosset Jr. in “Officer and a gentleman” but this mentor just disappeared and I never found him again. Perhaps he started his own service and markets this but I haven’t seen it. His idea on stops was the following….”You can either take the loss and try again or trade your way out”. He always tried to trade his way out and would sometimes lose on trend days… as it is a counter – trend strategy……a few other things….he would call in for the official opening range…( it is not the one minute high or low as some think but we can use that for exits)..I am using the opening price on the emini to set the levels . He would trade up to 50 contracts if he needed to so he was at times adding to a “losing trade” as some might say……he always took a 1.5 point profit target…….he didn’t alter this….I’ll think of other things as we go. He also thought that if the rumors where true and the floor traders where moving to screen trading then this strategy would become less effective…….it is only traded in the first hour and he only broke this rule if he was trying to “trade out”…..keep in mind this was designed when volatility was higher and 5 minute bar could have a range of 5 points…unlike today's markets……I think the levels are most important and although I don’t snap them on my own personal charts I have them written down on paper after the opening….He believed that at 10:30 EST you should close your business up and end for the day…unless he was trying to recover... ok enough of the history

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ok first we take the opening price and add and subtract the following numbers
The strategy tends to capitalize on the floors ability to push the market in one direction to sucker in the public for it to then only snap back towards the opening range…I have noticed that it works best when the market is pushed to an extreme of either an overnight high or low or the previous days high or low…so we can relate this to an “open-test-reject” as per Market profile concepts……
+- 2.5
+- 4.0
+-5.5
+-8.0
This sets up our WINDOW of trade entry points….For today Friday January 5th I have the opening price at 1424 so the downside numbers would be 1421.50, 1420, 1418.50 and 1416..and here are the rules.



1) If we open and drop down to the minus 2.5 number then rally to the open you buy
2) If we open and drop down to the minus 4 you then buy at the minus 2.5 on the way back up
3) If we drop down to the minus 5.5 you buy the minus 4 number
4) If we drop to the minus 8 you buy the minus 5.5
This is all reversed for the upside.
Anything beyond a plus or minus 8 meant the market was too risky too initiate from down or up from the opening so he avoided it…in general he believed that the further out into the WINDOW you went then the riskier it became…so buying a minus 2.5 after a hit on minus 4 is a safer trade then buying a minus 4 number after a minus 5.5…He didn’t use stops but his target was always 1.5 off the window number ..not your fill price...



You would stop trading if the markets dropped 2.5 points below the opening and then traded 2.5 above the opening…..this would be called a COMPLETED WINDOW RUN and the floor was done doing it’s business…you would be finished also…just one or two good trades a day……for now think about how you can incorporate the Pitbull One and II thread ideas into this……did you see the singles band with the first and second one minute bar today

The Market opens at 1424 and drops down to slightly below the minus 2.5 number at 1421.50…since we didn’t trade back to the opening at 1424 there is no long trade…..The market then drops further and goes to the minus 4 number at 1420 so we are a buyer at 1421.50……which is the minus 2.5…If you use stops then this trade would not have hit 1.5 points of profit and you lose if you are using stops….The market drops further to the minus 5.5 number to the tick at 1418.50..so you are a buyer at the minus 4 which is 1420….this achieves it’s target and rallies up to test the band..see pitbull thread II at the first and second one minute bars…not shown on this chart. ok...this is a lot so I will work on trying to clarify what needs to be clear…the second long was better because we had Tick divergence to support the trade…may seem complicated but it’s not..I’ll highlight the important stuff…..and ask questions...it helps me too to get this stuff in words

Bruce
like many here SPQR, I don't know WTF you're talking about....my reference was to Davids first three bars concept.....I'll go back through the "merged profile " thread to find it for those who aren't willing to put in the work.....What's your problem ? You seem so manic !!
quote:
Originally posted by SPQR

My point being Bruce was going to copy and paste his post (intellectual copyright infringement - and which also didn't contain any useful information) and spin what was in it to mean whatever the hell he thought best, to his own ends.

So instead of guessing what David meant and trusting Bruce's explanation of what couldn't be gleaned without additional material, I provided the material.

At least you left if up a day so that those who read it will know a lie when or if Bruce tells one re OBV. I hope they speak up too.

here is the post I was referring to...

http://www.mypivots.com/forum/topic.asp?TOPIC_ID=3667&whichpage=25&SearchTerms=merged%2Cprofile


here is the actual text.

"Tody is one of my favorite openings - three connsecutive five minute bars, all lower (or higher) and at least one a wide range bar. This is usually one of the few day where you can buy/sell the fifteen minute high/low and hold until the close (or 4.00 p.m. EST)."

SPQR, I get the feeling you like to try and push peoples buttons...your ego has you thinking that you really understand human nature....you don't and your trading suffers for that....I suggest you concentrate on the buttons on your trading platform in an attempt to make some profitable paper trades....with time you'll be able to trade real money with the many useful ideas we have given you here at mypivots...

First 3 bars in the 5 minute and first bar in the 15 what? Cumulative moving average of the On Balance Volume? If so what periods? What buy and sell signals are you refering to, and further what filters for those signals are you factoring?

None of that is mentioned in David's post in your thread or the published article to which he refers. The rest is you on about only you know what making it up as you go along.

What, specifically, mentioned or alluded in David's article here or elsewhere as regards to OBV goes well, in your opinion, with Crabels opening breakout strategy? More to the point, which Crabel opening breakout strategy?

See there? It's you who's vague and incomprehensible. Mostly to cover up your not saying anything. lol


quote:
Originally posted by BruceM

like many here SPQR, I don't know WTF you're talking about....my reference was to Davids first three bars concept.....I'll go back through the "merged profile " thread to find it for those who aren't willing to put in the work.....What's your problem ? You seem so manic !!
quote:
Originally posted by SPQR

My point being Bruce was going to copy and paste his post (intellectual copyright infringement - and which also didn't contain any useful information) and spin what was in it to mean whatever the hell he thought best, to his own ends.

So instead of guessing what David meant and trusting Bruce's explanation of what couldn't be gleaned without additional material, I provided the material.

At least you left if up a day so that those who read it will know a lie when or if Bruce tells one re OBV. I hope they speak up too.



I'm not addressing your questions because I think you act in a bad way SPQR. You are not the type I choose to associate with but will respond when I need some entertainment. Your image here leads me to believe that you are not a high caliber individual. I don't think you should expect EVERYTHING to be spoon fed to you......study methods that appeal to you and make them your own...
a low volume break of overnight high into the plus 4 - 5.5
2 sd's of vwap came in at 64.50.....from yesterday...so good confluence..
I shorted 68 even.....good volume blast before it,,,,plus 8- 10 near by
somebody selling the 870..I have the 68 and the 71's....nice volume diverging...chart later
I have a projection to 871 and your 10# from open @ 870.50 and a
bear candle signal @ 11:30edt @ 871.00...may not be much move down
while waiting for FOMC??
for what its worth we had a projection to 872.25(close but no cigar...871.75) and now a low projection of 854.50...time will tell....
Originally posted by BruceM

big mike...is this one of bitmans ideas u r using on weeklies

http://community.livevol.com/index.php/articles.html/_/options-trading/spx-weekly-credit-spread-strategy-r3205


Yes it is.