OptionsMillionaire SPY Moving Averages and Signals
by ColeJustice
OptionsMillionaire's SPY Options trading system is based mainly on these indicators:
- 8 EMA*
- 21 EMA*
- 100 SMA*
- 200 SMA*
- MACD
- RSI
- Squeeze Momentum
(*provided by this indicator)
and follows these rules:
|
| 1) I never fight the trend. If its green, i buy calls. If its red, i buy puts. I will only buy puts on a green day if there is a overall change in market trend. Inversely, calls on a red day
| 2) Price action is my #1 indicator. I wait for it to confirm my thesis before i enter a trade
| 3) I only trade SPY Options
| 4) My baseline is to choose a call/put that has a DTE (Date To Expiration) 6-7 days out, with a strike $2-$3 away. I adjust that to fit my current appetite for volatility. i virtually never play same day DTE's.
| 5) I set a 10% stop, but usually exit at 8% before my stop triggers depending on current situation
| 6) I utilize about 10-20% of my Portfolio for one trade. Sometimes more. Rarely less.
| 7) I never hold overnight in these market conditions.
| 8) I shoot for 10-20% for gains. Depending on market conditions.
| 9) Always look for confirmations in your indicators.
| 10) I never force a trade. No trade is a good trade too if the entry just isn't there.
| 11) Patience always pays off. A great set-up can form in minutes or seconds. I never regret being patient to enter. I nearly always regret rushing into a trade.
|
This indicator combines the moving averages into a single unit to simplify one part of the indicator usage rules: the 8 EMA / 21 EMA Cross. . The 8 crossing over the 21 is a Bullish signal, while the 8 crossing under the 21 is a Bearish signal. This indicator places flags at these crossover/under points, as well as shading the area between the 8 and 21 EMAs to help visualize the strength of the trend; green during a Bullish cross, and red during a Bearish cross.
A new addition to this strategy is the Hull Moving Average, or HMA. This script defaults to an HMA of 20 and shows alerts when candles close above or below the plot in the form of green and red candle backgrounds. This alert is best used in conjunction with the main crossovers and should be considered an addition level of confidence rather than providing trade entry/exits directly. This indicator is more flexible and you should feel free to adjust the period if you find a different value works better within your own personal trading style.
Each individual element of this indicator can be modified or toggled, providing maximum customization. While you should strive to become comfortable with the default settings, these options are provided in case you feel the need to adjust for your own style (or if testing on tickers other than SPY, for example).
Goodluch, and happy trading!
OptionsMillionaire's SPY Options trading system is based mainly on these indicators:
- 8 EMA*
- 21 EMA*
- 100 SMA*
- 200 SMA*
- MACD
- RSI
- Squeeze Momentum
(*provided by this indicator)
and follows these rules:
|
| 1) I never fight the trend. If its green, i buy calls. If its red, i buy puts. I will only buy puts on a green day if there is a overall change in market trend. Inversely, calls on a red day
| 2) Price action is my #1 indicator. I wait for it to confirm my thesis before i enter a trade
| 3) I only trade SPY Options
| 4) My baseline is to choose a call/put that has a DTE (Date To Expiration) 6-7 days out, with a strike $2-$3 away. I adjust that to fit my current appetite for volatility. i virtually never play same day DTE's.
| 5) I set a 10% stop, but usually exit at 8% before my stop triggers depending on current situation
| 6) I utilize about 10-20% of my Portfolio for one trade. Sometimes more. Rarely less.
| 7) I never hold overnight in these market conditions.
| 8) I shoot for 10-20% for gains. Depending on market conditions.
| 9) Always look for confirmations in your indicators.
| 10) I never force a trade. No trade is a good trade too if the entry just isn't there.
| 11) Patience always pays off. A great set-up can form in minutes or seconds. I never regret being patient to enter. I nearly always regret rushing into a trade.
|
This indicator combines the moving averages into a single unit to simplify one part of the indicator usage rules: the 8 EMA / 21 EMA Cross. . The 8 crossing over the 21 is a Bullish signal, while the 8 crossing under the 21 is a Bearish signal. This indicator places flags at these crossover/under points, as well as shading the area between the 8 and 21 EMAs to help visualize the strength of the trend; green during a Bullish cross, and red during a Bearish cross.
A new addition to this strategy is the Hull Moving Average, or HMA. This script defaults to an HMA of 20 and shows alerts when candles close above or below the plot in the form of green and red candle backgrounds. This alert is best used in conjunction with the main crossovers and should be considered an addition level of confidence rather than providing trade entry/exits directly. This indicator is more flexible and you should feel free to adjust the period if you find a different value works better within your own personal trading style.
Each individual element of this indicator can be modified or toggled, providing maximum customization. While you should strive to become comfortable with the default settings, these options are provided in case you feel the need to adjust for your own style (or if testing on tickers other than SPY, for example).
Goodluch, and happy trading!
Versionshinweise:
Fixing an oopsie with the chart!
Versionshinweise:
Small update based on some feedback:
1) Displaying VWAP (Volume Weighted Average Price) is now included, and is displayed as white dots. Since VWAP is not a part of OM's core strategy, it is off by default and can be toggled on in the "Inputs" panel. VWAP is useful in intraday time frames and represents exactly what it says: the average price throughout the day, based on both volume and price. In general, price above VWAP is Bullish, and price below VWAP is Bearish (but always confirm with other indicators).
2) The Hull Moving Average has been toggled off by default, since it is not part of OM's core strategy (yet, he's still testing it). Functionality remains the same if toggled back on.
2a) Fixed a bug where toggling Hull off didn't remove the alert bands as well.
3) Color change to the 8 ema, 21 ema, and 20 hma; 8 is now magenta, 21 is now green, and hull is now cyan. I made this change on the advice of fellow traders. Of course it is changeable to your own desires.
1) Displaying VWAP (Volume Weighted Average Price) is now included, and is displayed as white dots. Since VWAP is not a part of OM's core strategy, it is off by default and can be toggled on in the "Inputs" panel. VWAP is useful in intraday time frames and represents exactly what it says: the average price throughout the day, based on both volume and price. In general, price above VWAP is Bullish, and price below VWAP is Bearish (but always confirm with other indicators).
2) The Hull Moving Average has been toggled off by default, since it is not part of OM's core strategy (yet, he's still testing it). Functionality remains the same if toggled back on.
2a) Fixed a bug where toggling Hull off didn't remove the alert bands as well.
3) Color change to the 8 ema, 21 ema, and 20 hma; 8 is now magenta, 21 is now green, and hull is now cyan. I made this change on the advice of fellow traders. Of course it is changeable to your own desires.
Versionshinweise:
1) Updated the inputs with groups and dropdowns for selecting moving average types.
2) Added optional Standard Deviation bands to VWAP
3) Changed bonus MAs defaults to 34 SMA and 50 SMA
2) Added optional Standard Deviation bands to VWAP
3) Changed bonus MAs defaults to 34 SMA and 50 SMA
Versionshinweise:
Fairly major update! Lots of changes so check the changelog if you're confused.
1) Removed the Hull Moving Average. The call/put signals weren't strong enough to justify the alerts, in my opinion, and cluttered the chart.
---The code for the Hull alerts are retained; if you want them back you can clone and edit the script to uncomment those lines. They are marked clearly.
2) Added a third "Bonus" moving average in lieu of the Hull; if you liked the Hull you can customize this to replace it.
3) Cleaned up the input panel with inline inputs and removed the check boxes for the bonus MA's; those can be toggled in the style section if desired.
4) included ALMA as an option for MA types
1) Removed the Hull Moving Average. The call/put signals weren't strong enough to justify the alerts, in my opinion, and cluttered the chart.
---The code for the Hull alerts are retained; if you want them back you can clone and edit the script to uncomment those lines. They are marked clearly.
2) Added a third "Bonus" moving average in lieu of the Hull; if you liked the Hull you can customize this to replace it.
3) Cleaned up the input panel with inline inputs and removed the check boxes for the bonus MA's; those can be toggled in the style section if desired.
4) included ALMA as an option for MA types
Versionshinweise:
Minor update adding built in alerts for the Calls/Puts flags.
Versionshinweise:
1) Bonus MAs 1 and 2 default to "off". OM's current strategy doesn't need them and they add clutter to the chart. They are easily toggled back on the in the Inputs menu if desired.
2) VWAP defaults to "on", standard deviation bands default to "off". This is also in response to OM's evolving strategy.
3) You can now toggle between text-based Calls and Puts flags, or text-less up and down triangles.
2) VWAP defaults to "on", standard deviation bands default to "off". This is also in response to OM's evolving strategy.
3) You can now toggle between text-based Calls and Puts flags, or text-less up and down triangles.
Versionshinweise:
Simple update: added the ability to set a multiplier for VWAP Standard Deviation bands.
Versionshinweise:
Adding a new Moving Average type to the available options. Please welcome the Zero Lag Moving Average (ZLMA) to the party!
From Wikipedia:
The zero lag exponential moving average (ZLEMA) indicator was created by John Ehlers and Ric Way.
As is the case with the double exponential moving average (DEMA) and the triple exponential moving average (TEMA) and as indicated by the name, the aim is to eliminate the inherent lag associated to all trend following indicators which average a price over time.
The idea is do a regular exponential moving average (EMA) calculation but on a de-lagged data instead of doing it on the regular data. Data is de-lagged by removing the data from "lag" days ago thus removing (or attempting to) the cumulative effect of the moving average.
From Wikipedia:
The zero lag exponential moving average (ZLEMA) indicator was created by John Ehlers and Ric Way.
As is the case with the double exponential moving average (DEMA) and the triple exponential moving average (TEMA) and as indicated by the name, the aim is to eliminate the inherent lag associated to all trend following indicators which average a price over time.
The idea is do a regular exponential moving average (EMA) calculation but on a de-lagged data instead of doing it on the regular data. Data is de-lagged by removing the data from "lag" days ago thus removing (or attempting to) the cumulative effect of the moving average.
Versionshinweise:
Added the option for a second set of VWAP standard deviation bands and a highlight fill between them. These bands are commonly used as areas of possible support or resistance.
Versionshinweise:
If you like this indicator and want to see more, check out the rest of my stuff here!
- Added custom timeframes to the signal MAs and bonus MAs individually. These can be useful for showing the trend in a higher timeframe without needing to switch charts.
- Added an "Ignore Extended Hours" toggle to stop Pre-Market and After-Hours price action from affecting the MAs.
If you like this indicator and want to see more, check out the rest of my stuff here!
Thanks for using my indicators; I hope they make you money! Check out the website link for more, and thanks for your support!