Software for Serious traders
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Kwik*POP
The Next Generation in Trading Software
August,3rd,2011
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Greetings,
We apologize that some of you were not able to get in our chat room today. Here is a brief recap of what was discussed.
JS Services breaks the markets down into what they call 'States' and 'Signature States'. The market state is bullish, bearish or neutral. Then they bore down deeper to define the 'Signature State' which is more specific to the current days action.
There are 19 signature states based upon all of their various analytical tools. Defining each signature state gets more into the quantative analysis side of the ledger, but suffice it to say that each signature state produces a price action pattern, intra-day, that appears greater than 55% of the time when the market is in a specific signature state. That price pattern would be a probability map.
Let's think of this a different way. Let's call it a PLAY BOOK.
Each market state has an anticipated price pattern that may unfold, based upon extensive quantative probability mapping. Todays Signature State was Neutral Negative Extreme.
Let me describe that a different way. The market was EXTREMELY OVERSOLD, and a very real possibility existed that prices could spike down to a new low and ... off that low ... a very powerful rally could unfold taking prices all the way back up to the high end of the daily range.
In JS Services the critical lines are the UP(up pivot line), the DP(down pivot line) and the Reversal line. There are other lines, but they are of lesser signifigance. The relationship of those three lines really define the signature state for the day.
Here is the typical price map for a Neutral Negative Extreme day in the ES.
That map does not guarantee that prices will respond in a similar pattern, but absent exogenous events, over 55% of the time this is how it usually plays out. So, coming into today we had a Neutral Negative Extreme signature state with an MC reading of -1.
BEFORE the US markets open, we turn to our PLAYBOOK and study the typical pattern for a Neutral Negative Extreme signature state. Then we watch the price action after the market opens and when a Kwik*POP pattern signal kicks in ...WE ARE IN THE GAME!
Let's look at how things played out today on a Neutral Negative Extreme day. The chart below is a Kwik*POP chart with the JS numbers automatically plotted on the chart from KP SONAR. The arrows mark KP pattern trades (HPL, LPH etc). Using the JS SERVICES probability map and UP, DP and R lines, a trader could have taken out 40 handles today! Selling into the DP and buying the reversal back up.
Match the REAL PRICE PATTERNS with what the PLAYBOOK suggested for this type of day.
Please note that the moves over the last few days have been exceptionally large, so don't expect big swings like this all of the time. In fact, we only get these really big swings about 25% of the time in higher volatility environments. BUT, EVEN IN LOWER RANGES AND LOWER VOLATILITIES ... THE PATTERNS PERSIST.
And, hey, that's what we're all about ..PATTERNS THAT REPEAT!
Stay tuned for more updates. We are quite excited and look forward to building the PLAY BOOK with those of you that are srious about trading for a living.
Regards,
WDH
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