CISCO Futures

1-303-306-1521 1-800 800 7227 Fax 1-303-368-9449
Internet http//www.cisco-futures.com
Email dljones@cisco-futures.com

Market Profiles (tm) Develop Market Structure

Simple Trading Strategy using Visual Graphic

  Look at Visual Graphic at today's close for tomorrow's trading 

  Identify the overlays that are bracketing. 
  You will see below each overlay in the Visual Graphic:
  -- the number of days in the overlay i.e. 5 or 10 or 20 days
  -- whether the overlay is "Bracketing" or if there is "No Bracket"

  If the 5 day overlay is bracketing the market is in a 5 day balance, etc.
  For Bonds we usually use the 5 day bracket.  A market with a ten day balance
  and no 5 day balance is not bracketing.

  For each overlay that is bracketing, record:
  -- the bracket upper/lower limits 
  -- the bracket upper/lower octants
  -- the middle price of the overlay
  -- the $ value of the Octant to the Middle 
  These values are listed below a bracketing overlay:
  -- The 'U'  and 'L'  have to their right Upper/Lower Bracket Limit prices
  -- The 'UO' and 'LO' have to their right Upper/Lower Bracket Octant prices
  -- The M has to its right the price in the middle of the overlay
  -- The number to the right of 'UO' and 'LO' price is $ Octant-Middle width

  Here is a simple strategy for ENTERING a Breakout Trade:
  -- Pick a market that is in balance and pick a bracketing overlay
  -- Tommorrow watch for price moves above/below the upper/lower bracket limits
  -- If price moves 1 tick above the bracket upper price limit go long 
  -- If price moves 1 tick below the bracket lower price limit go short
  
  Here is a simple strategy for EXITING a Breakout Trade:
  -- On the day of trade ENTRY:
     -- place a stop at Upper Octant/Quadrant price for an upside breakout
     -- place a stop at Lower Octant/Quadrant price for a downside breakout
     -- for day traders, if you are not stopped out, exit on the close
     -- for swing traders, if you are not stopped out, hold overnite
  -- On the days following the day of trade entry (swing traders):
     -- exit on the formation of a new bracket 
     -- move your stop to the most recent previous last node    

  Here is a simple strategy for ENTERING a Responsive (day) Trade:
  -- Pick a market that is in balance and pick a bracketing overlay
  -- Tommorrow watch for price moves above/below the upper/lower octant
  -- If price moves above the bracket upper octant price go short
  -- If price moves below the bracket lower octant price go long

  Here is a simple strategy for EXITING a Responsive (day) Trade:
     -- place a stop at Upper Limit price for short trades 
     -- place a stop at Lower Limit price for long trades
     -- your target is the middle price of the overlay (for maximum profit)
     -- if you are not stopped out/have not reached the middle, exit on close
  
   The maximum profit from a responsive trade is the Octant to Middle $ width.
   The maximum loss from a responsive trade is the Limit-Octant $ width
   The maximum loss from a breakout trade is the Limit-Octant/Quadrant $ width

   Typically profits should be at least $100 to pay for slip and commissions.

   This strategy is based on the dynamics of a balanced market. In a balanced
   market price rotates within a bracketing price region spending most of
   its time in the center of the bracket and far less at the extremes of the
   bracket. When prices moves out to the extremes it is most likely to return
   to the center of the bracket. If it does not return to the center but moves
   outside the bracket limits, the market is most likely no longer balanced.
   A trend may be starting. On occasion the price breakout is false and the
   price returns to well within the bracket. For a market in balance, once 
   price has returned to the center of the bracket it has a 50-50 chance of 
   moving up or down. If a market in trend forms a new bracket there is a now 
   a 50-50 chance of price moving up or down and the trend is most likely over.

   These simple rules help you understand the market dynamics.  Your trading
   is naturally going to involve more understanding of just what it is the
   market is doing at this point in time.  For a more comprehensive look
   into trading:
   Day Trading Support and Resistance


  For more information contact CISCO Futures at:
  WEB address: www.cisco-futures.com
  Postal Address: 14571 E. Mississippi Ave., #202, Aurora, CO 80012 USA
  Telephone: 303-306-1521 or 1-800-800-7227
  Fax: 303-368-9449
  Email: dljones@cisco-futures.com
  Send e-mail to CISCO at dljones@cisco-futures.com
   http://www.cisco-futures.com/