MarketGauge Opening Range Success Formula O

Reprinted from Technical Analysis of Stocks
& Commodities magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com
product review
MarketGauge
Opening Range Success Formula
DataView LLC
70 Sparta Ave, Suite 203
Sparta, NJ 07871
Phone: 888 241-3060
Internet: www.openingrange.com,
www.marketgauge.com
Email: (tech support) info@
marketgauge.com; (sales) geoff@
marketgauge.com
Product: Trading course
Requirements: No special graphics
required, but broadband is always
helpful
Price: $1,297 with a 30-day moneyback guarantee or Blueprint and one
month of Opening Range Mastery;
$147 a month, which includes
HotScans ($75 a month separately).
by Dennis D. Peterson
O
pening Range Success Formula,
MarketGauge’s new product,
is a trading course and mastery
program, with multiple strategies for
daytrading equities and commodities.
Opening Range Success Formula is
based on pattern-based trading strategies.
There are two parts to Opening Range
Success Formula: the OR Blueprint and
OR Mastery. Let’s take a look at each.
OR blueprint
Figure 1: typical course module. View nine modules to understand the background and setups for
MarketGauge’s opening range trading strategy. After selecting a particular module, click on specific topics in
the table of contents to the left. The modules are all narrated with both graphics and text. Controls at the bottom
let you pause the presentation as needed.
Figure 2: OPENING RANGE STATISTICS. The price pattern chart is annotated with up and down arrows
where the low of the day, up arrows, or the high of the day, down arrows, occurred within the first 30 minutes.
The period chosen established the high or low of the day 68% of the time within the first 30 minutes.
This is where you learn what MarketGauge calls its opening range trading
strategies. There are nine modules about
six hours in length. The Introduction
module is basically a synopsis of the
trading backgrounds of MarketGauge
cofounders Keith Schneider and Geoff
Bysshe. The second module, Basic
Opening Range Theory, gives you the
overall approach. The next six modules
give you specific trading pattern setups,
such as momentum swing trade with
three-day pivots (Figure 1), gapping
bulls and bears, and reversal trade. The
ninth module is the conclusion.
One of the charts in the theory module provides some interesting statistics.
In general, the first 30 minutes of each
day establishes the high or low of the
day 35% of the time, and in periods
of expanded volatility, this percentage
tends to rise. Just prior to attending a Las
Vegas conference, Bysshe demonstrated
this with a brief period, showing that the
high and low were established 68% of
the time, as annotated on the chart with
up and down arrows (Figure 2).
The OR Blueprint tab has two sections:
The Course and Pre-set HotScans. From
the Course titles, you might conclude
there are six setups or events to learn.
You’ll find there are actually 13 when
you choose the Pre-set HotScans. These
scans are preset for your convenience
and can be customized in many ways.
MarketGauge gives you a lot of material to consider. To help you remember
the material, MarketGauge created what
Reprinted from Technical Analysis of Stocks
& Commodities magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com
product review
it calls a Mindmap (Figure 3) to provide
a way of organizing the material. They
are the steps you want to go through to
maximize your odds of success.
One overall approach is identify the
most-active stocks in the premarket, then
update your watchlist with real-time updates after the market has opened. After
the market has opened, you want to get
an idea of the general market direction.
MarketGauge suggests using Spy (Standard & Poor’s 500), Dia (Dow Jones
Industrial Average), Qqqq (Nasdaq
100), and Iwn (Russell 2000), and look
for times when all four are moving in the
same direction or find a situation where
three are showing the same behavior and
the fourth is divergent in a way leading
the other three. Three might be showing
a bottoming pattern, for example, while
the fourth has moved off its lows and is
headed up.
Sectors refer to the usual suspects, and
MarketGauge’s HotScans web-based
dynamic tool product can help with a
beta product you can use to see which
industry groups are the most active and
what direction they’re going. Your time
horizon will affect how long you stay in
a trade and the period of your price bars
— for example, daily versus five-minute
bars. If you are trading five-minute bars,
it’s not likely you’ll be holding any positions open overnight, or if you just want
to trade before you go into work in the
morning.
OR Blueprint (Techniques)
As you go through the individual
courses, you’ll become aware of what
MarketGauge refers to as reference
points. These are three pairs of lines,
all related to opening range, six lines in
total since there is a high and a low for
each. The one you might not be familiar
with is the three-day pivot. Basically, it
smoothes the data by using a midpoint
calculated from a three-day range bar,
then calculates the high and low using
the difference between the midpoint
of the range and a three-day range bar
midpoint.
If this sounds confusing, an easier
way to understand is to look at the Excel
calculation that MarketGauge supplies.
Figure 1 gives an illustration of the
FIGURE 3: OPENING RANGE MINDMAP. To help with organizing the material, MarketGauge has created a
series of elements that let you put material you learn into different buckets. Note that, independent of the time of
day, you still want to scan for the most active, understand general market direction, and then recognize what type
of trading you can support — that is, a full-time trader scalping versus a part-time swing trader.
FIGURE 4: PRICE CHART WITH REFERENCE VALUES. Six lines, where green is for high and red for low, are
used to analyze price behavior: dashed lines are for a 30-minute opening (the red dashed line is under thicker
green line), nonlabeled solid lines are for yesterday’s range, and labeled lines are three-day pivot values. The
MarketGauge dialog that might go with the chart would be something like: (1) prices move up, then consolidate
at the opening range high (white rectangle); (2) a wide range bar is the breakout above the bars leading into the
consolidation; (3) the 30-minute opening range high, and (4) checking the SPY at 8:15 am toward the end of the
consolidation shows weakness, and therefore, this stock is showing strength.
Opening Range is like other trading strategies
that have strong success records with its heavy
reliance on patterns.
principle: when prices are in a trend,
say an uptrend, look for prices to move
above the reference line pivot high. The
three-day pivot high would be the entry
point.
The underlying principle that MarketGauge follows is to look for a breakout
of prices from a consolidation pattern
and that then moves above one of their
key reference points (the three-day
pivot high, when you are in an uptrend,
or below the three-day pivot low if in
a downtrend, is an example). Figure 1
illustrates this point by showing prices
Reprinted from Technical Analysis of Stocks
& Commodities magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com
product review
breaking above the green dashed line
while in an uptrend. Market action that
breaks above (or below) is significant,
and hence, they are referred to as reference lines because price action often
reflects or refers to them. If you ask
how MarketGauge determines whether
prices are in a trend, the answer is that
they advise using the slopes of the 10-,
20-, and 50-day simple moving averages
(Smas) and whether the Smas are stacked
one above another.
To help create price charts with these
reference lines (Figure 4), you can go
to www.marketgauge.com/TS for the
TradeStation code. They also have a
chart template you can download for
TradeStation as well. Use TradeStation
8.6 or newer to get the code and template
imported. The type of MarketGauge
narrative to analyze the price action is
given in the Figure 4 caption. The very
last step in the caption is as important as
the first three. If you recall the discussion
about Mindmaps, one of the steps is to
check the overall market conditions.
An example of the care that has been
given to this course is that price action
relative to reference lines has its origins
in the second module, Basic Opening
Range Theory, where “Trading the line”
is discussed. The narrator doesn’t give
you specific details of the line, only that
it is support/resistance.
feed is in the works to provide real-time
alerts from Bysshe and Schneider. All
the live and video training is archived
and include such topics as volumeweighted average price (Vwap), using
volatility index (Vix), and floor trader
pivots OR.
OR mastery
My friends often ask what I think the
market is going to do. If I were to ask
Schneider and Bysshe, I would pay attention to the answer. And that is what
you get with the mastery program.
Opening Range is like other trading
strategies that have strong success
records with its heavy reliance on patterns. Both Bysshe and Schneider trade
every day. You can’t do this for 20 to
30 years and still have any money if
you aren’t successful. Try this product.
You’ll like it.
After completing the course, it’s time to
put what you know to work. For support,
the OR Mastery program provides six
hours of prior live seminars provided to
mastery participants. In addition, there is
a forum for all participants, with regular
messages left by Bysshe and Schneider
to guide you in your trading. Schneider’s
message is about overall market conditions such as whether the market is
overbought or oversold, while Bysshe’s
is oriented toward HotScans screens you
will want to consider.
There is a live seminar once a month,
and twice-weekly training videos with a
monthly theme. Plus, a private Twitter
Summary
Dennis Peterson is a Staff Writer for
Stocks & Commodities.
S&C