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…… Ok first we take the opening price and add and subtract the following numbers 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. 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……. 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 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. ”You can either take the loss and try again or trade your way out”.
Perhaps he started his own service and markets this but I haven’t seen it. in “Officer and a gentleman” but this mentor just disappeared and I never found him again. Originally I thought he was going to turn out like the Army Sargent played by Lou Gosset Jr.
The man who taught this was gruff, sometimes abusive ( especially when the future vendor Kingfish came in the room) but always answered questions… It was designed for the big S&P contract so I have modified it slightly for the emini. I “watched” him trade this for about 9 months in real time. I present it here mostly as it was taught to me for free.
This was before Paltalk and Hotcomm was popular. 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. Perhaps some of you have seen or heard about various forms of this. Here is a strategy which I did not originate.