IWM Robot Trading for May 23, 2011

[Billy]

The current IWM Robot short position is developping nicely since the entry at 84.81 on May12.
Judging by the pre-market activity, IWM is now trading between Quarterly Pivot (81.80) and Weekly S1 (81.52), not very far above the probable 3-day target of 81.16. This target is still within an acceptable range of porosity allowance below the QPP and WS1 cluster, so this area remains a potential bounce attempt zone. But trade optimization rules tell us not to cover our short before a homonymous signal from the 20 DMF with long probabilities edges!
A neat bounce starting near WS1 would potentially create a bullish bias for the rest of the week, as WS1 + porosity typically marks weekly reversal lows. However, a failed bounce is almost certain to create a selloff to Weekly S2 (80.17) which would confirm an intensification of heavy selling bias. From there, Quarterly S1 (79.32) is likely to be hit fast because IWM has shown a strong pattern of leaping by Quarterly levels recently and I would not be surprised if Monthly S2 (79.52) just above QS1 was programmed as an end-of-month target in major algo and HFT strategies.
Billy

[Charl]

The current IWM Robot short position is developping nicely since the entry at 84.81 on May12.
Judging by the pre-market activity, IWM is now trading between Quarterly Pivot (81.80) and Weekly S1 (81.52), not very far above the probable 3-day target of 81.16. This target is still within an acceptable range of porosity allowance below the QPP and WS1 cluster, so this area remains a potential bounce attempt zone. But trade optimization rules tell us not to cover our short before a homonymous signal from the 20 DMF with long probabilities edges!
A neat bounce starting near WS1 would potentially create a bullish bias for the rest of the week, as WS1 + porosity typically marks weekly reversal lows. However, a failed bounce is almost certain to create a selloff to Weekly S2 (80.17) which would confirm an intensification of heavy selling bias. From there, Quarterly S1 (79.32) is likely to be hit fast because IWM has shown a strong pattern of leaping by Quarterly levels recently and I would not be surprised if Monthly S2 (79.52) just above QS1 was programmed as an end-of-month target in major algo and HF
Billy

Hi Billy,
Thank you for perspective in terms of the Multi timeframe Pivots. Helps me in planning RM for the up-coming week.

Regards
Charl

[johnboy70]

Hi Billy,
Thank you for perspective in terms of the Multi timeframe Pivots. Helps me in planning RM for the up-coming week.

Regards
Charl

Charl,

Did you mean RWM (not RM)?

John

[grems8544]

Billy,

Can you discuss how you determine a 3-day target of 81.16?

Regards,

pgd

[Billy]

Billy,

Can you discuss how you determine a 3-day target of 81.16?

Regards,

pgd

Paul,

The "most probable" 3-day target is simply Today's optimal entry minus (the 3-day expected gain times the probabiliy of achieving this gain) 82.74- 82.74*(3.10% * 61.67%).
All these numbers are given daily on the IWM Robot page. The "most probable" target is not part of the robot system, but allows for monitoring that everything is evolving as or even better than expected.
Billy

[Charl]

Charl,

Did you mean RWM (not RM)?

John

Hi John,
I actually meant Risk Management. Sorry about the confusion.

Charl

[johnboy70]

Billy,

Okay, you've got me with the use of this word! It's been bothering me all day! I "googled" it and what I found was:

homonymous:

1.having the same name as another
2.of or pertaining to a homonym

Would you please interpret for me so that I might better understand what you meant.

Thanks,

John

[Billy]

Billy,

Okay, you've got me with the use of this word! It's been bothering me all day! I "googled" it and what I found was:

homonymous:

1.having the same name as another
2.of or pertaining to a homonym

Would you please interpret for me so that I might better understand what you meant.

Thanks,

John

John, I simply meant a "cover your short" signal from 20 DMF. English is not my mother tongue so I guess I often make language errors, but I think I was correct in this case. Billy

[johnboy70]

Billy,

I should say that you had me fooled, that is, in terms of English not being your native tongue! The funny part is that I'm almost beginning to understand you in terms of pivot language. However, I must confess that I don't understand the logic of why certain algorithms are preprogrammed for certain levels which is why I really need your class whenever you begin that.

John

[happy]

Paul,

The "most probable" 3-day target is simply Today's optimal entry minus (the 3-day expected gain times the probabiliy of achieving this gain) 82.74- 82.74*(3.10% * 61.67%). Billy

Billy ... just to confirm the math, in your scenario above, the 'most probable' exit would have been $81.158 giving a 1.91% gain.

$82.72 * (0.031 * 0.6167) = $1.581
$82.72 - $1.581 = $81.1582

Can you please confirm that I am doing the math correctly?