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Day Trading
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Trading with the SureFireThing Camarilla Equation

Trading with the SureFireThing Camarilla Equation is discretionary - although the main 'philosophy' of the system seems mechanical, a reasonable amount of experience and knowledge is needed to trade the equation well. Basically, you give the Equation yesterday's open, high, low and close. The Camarilla Equation will then give you 8 levels of intraday support and resistance. There are 4 of these 'L' levels above yesterday's close, and 4 below. Below the close they are numbered L1, L2, L3 and L4, and above the close H1, H2, H3 and H4. The important levels to note are the 'H3' and 'L3' levels, points where significant reversals are likely, and the 'H4' and 'L4' levels which are where breakouts have a tendency to start. How you specifically enter a trade depends to some extent where the market opens.

Market Open BETWEEN 'H3' and 'L3'

If the market opens BETWEEN the H3 and L3 levels, you must wait for price to approach either of these two levels. Whichever level it hits first gives you your first trade.

Camarilla Equation - Market opens INSIDE L3

If the H3 level is hit, the idea is that you go SHORT (against the previous trend) in the expectation that the market is about to reverse, with a stoploss point somewhere between the H3 and H4 levels (if it his H4, chances are it's going to breakout bigtime upwards, so you want your stop to be before that!).

Camarilla Equation - Market opens OUTSIDE L3

SureFireThing, suggest that you wait for price to bounce back down into the H3 level again before entering the trade, as you will therefore be technically trading WITH the short term trend. You need afair amount of experience for this style of trading. The opposite, of course applies if the LOWER L3 level is hit first - wait for it to come back up, then go LONG.

Market Open OUTSIDE 'L3' and 'H3'

In this case, you wait for the market to retreat back thru the L3 or H3 level - you will then be trading WITH the trend, and once again, put a stop loss somewhere before the matching H4 or L4 level. Taking profits is down to you - trailing stops seem popular. You need to be aware that you WILL want to take profits at some time during the day, because the market is unlikely to 'behave' and stay right-sided for your trade. These reversals from H3 and L3 appear to happen fairly frequently during intraday trading.

 

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