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Entering Trades with the Camarilla {b} Equation

The process of becoming a 'Day Trader' is widely regarded as difficult, if not almost impossible. You may personally know people who have spent many months, and many thousands of dollars trying fruitlessly to earn a living from the recalcitrant markets, only to give up at the end and proclaim that 'day trading can't be done'. However, the reality is different. Day Trading IS a business, and you wouldn't expect to start any other business without experience and yet instantly make a fortune, would you? Herein lies the problem. To become good at Day Trading, you would normally have to 'put your time in', and 'take your licks', in other words, suffer to learn the skills necessary to survive. This process of becoming a competent day trader is usually very painful, and most people don't survive it. The sheer capital evaporation is enough to see the majority of them run away, and most of the rest become depressed at what they perceive as constant knock-backs or failure, and they quit too.

Those who survive and become master day traders cannot understand the quitters. To them, the entire process becomes easy; even pleasurable. Nothing could be more natural than to take serious cash out of the market on a regular basis, even every day. The point of the Camarilla {b} Equation is that it 'jump starts' your day trading career; it will put you on an even footing with day traders who possess many years of experience. A large number of day traders swear by their pet indicators, wierd stochastics, combinations of moving averages, mystic pyramid Gann angles and so on. NONE of these things are necessary. You simply need to know:-

  • When to stay on the sidelines
  • When to jump in
  • When to take your profits
  • When to run if it goes wrong.

These essential items of information will be supplied to you by the Camarilla {b} Equation, and if you follow the Equation's advice sensibly, the day trading profits should flow. Let's take a look at the strategy.

When to stay on the sidelines

Most days, any market will meander, apparently purposelessly, in a range bounded by a high and a low. If we consider a market like the S&P 500, what we are witnessing here are the 'floor traders' in the 'pit' earning their crust. By bidding the price up, up, up, then down, down, down, they 'rotate' prices, and cause 'weak holders' to be stopped out, dragged in, thrown out again. This is how they make a living; by exploiting their 'edge' (the difference between the bid and the ask) plus their immediacy on the floor to nibble a few bucks here and a few bucks there. Ordinary day traders get fooled into thinking the market is heading higher, buy it, only to see it suddenly drop again, forcing them to get out in a panic. Yes, you guessed it, the big day trading firms and floor traders just sold to that guy at $825, then bought it back from him at $823. That guy just gave a floor trader $2 and the spread. Silly. The reality is, if you are an inexperienced day trader, you CANNOT compete with them within this channel; they will eat you for breakfast.

On other electronic markets without pits or floor traders, the same thing happens; ultra-short timeframe 'scalpers' with big wallets do the same thing, forcing the market in one direction, then whipping it back, taking a small profit in the middle. They do this all day long, and live on the money of inexperienced day traders who THINK they have spotted a trend forming. Say it with me; if you are inexperienced, you CANNOT compete with these guys within that channel.

The Camarilla {b} Equation defines a 'flat channel' for you. By entering yesterday's open, high, low and close you will receive a 'Go Long' number and a 'Go Short' number. If price is between these two numbers, you must have patience, and sit on your hands. Read a book. Phone a friend. Learn to juggle. Do ANYTHING, but DON'T TRADE!