If you are a trader, particularly trading ES or spoos, you know how the intraday market often pulls you out of a trade executed at the wrong time. He was expecting a short trade and he was right, but he went in too early. A common problem for all traders. What if there was a way to know if the market was moving in your favor before you executed? We think there is. And it mainly depends on reading both the trin and the vix. Consider this premise.
If there was an effective way to tell if a trend had started on the trin, would it necessarily mean that the same trend had started on the vix? No problem. Unless both trin and vix have ended an existing trend, trading against either of them could easily result in losses. We have developed a time-tested method of determining when a trend exists, as well as a means of determining targets for when it will end. And we’ve built a comprehensive and consistently profitable strategy around it.
We’re sharing our logic here for the first time anywhere.
When using a 1-minute chart, the trin and vix move in small increments measured to the second decimal point (1/100). To illustrate the idea we will only talk about the trin although the basic idea also applies to the vix. The first problem, however, is determining which part of the bar you’re looking at. We believe that the high of trin and vix corresponds to the low of spoos. The opposite also is true. Also forget about all preconceived ideas about what is bullish or bearish. Trin can be at 3.4 and go down to 1.9 and you can see a big rally in the process.
Assuming the trin has established a pivot in the opposite direction, if a trend is being established, look for the following.
The trin should go from the current 1/10 decimal point to a new 1/10 decimal point. Yes
current reading 1.15 and rising. To be in trend, the trine must move at least 1.2X. Trin must not have been lower than 1.15 when you start tracking it. Also, if the trin moves below 1.15, the uptrend has probably not started and you should continue to watch. But once it starts moving, it WILL MOVE to the next 1/10 decimal point and probably continue at 1.3X or 1.4X or more. Therefore, the trend has started and trading with the trend will produce successful trades.
Another compelling factor, however, is the existence of gaps in the trin and vix. We define a gap in this way. If the close of the previous one-minute bar does not intersect with any part of the current bar, a gap exists. Equally important is that if the high of the current bar has not crossed the close of the previous bar, it has a gap that suggests the index will move UP to fill the gap, resulting in a corresponding drop in spoos. when the space is filled. If the current bar low does not cross the previous bar, the index will move down to fill the gap, resulting in a corresponding move up in spoos when the gap is filled. Holes of any size in the trin are always filled. Gaps in vix less than 0.05 may not be filled. We have the data to prove it. So if you know where these gaps are, if the current reading is generally close to a known gap, holding the trade until the gap is filled can be hugely profitable.
We invite you to explore these concepts on your own or if you want to see specific results, visit our website or write to us for examples of any historical date and we will provide you with the data.