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FIGURE
29.1
Weekly
Is
Used
to
Determine
the
Immediate
Trend;
Daily
Is
Used
to
Time
the
Trade
Using
the
Higher-Time-Frame
Filter
Source:
eSignal.
www.eSignal.com
190
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February 22, 2008
17:4
Char Count=
AR
T® Char
t #65;
S&P E-Mini;
One-Min
ute and Fiv
e-Min
ute
.
FIGURE
29.2
5-Minute
Is
Used
to
Determine
the
Immediate
Trend;
1-Minute
Is
Used
to
Time
the
Trade
Using
the
Higher-Time-
Frame
Filter
Source:
eSignal.
www.eSignal.com
191
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192
ADVANCED TECHNIQUES
S&P E-MINI DAY-TRADING EXAMPLES USING
THE HIGHER-TIME-FRAME FILTER
The following figures 29.3 through 29.8 show examples of using the ART
higher time-frame approach to day trade the S&P e-mini. But remember,
this ART technique can be used on any time frame and on any market by
day traders, position traders, and investors.
These examples of using multiple time frames show you how to in-
crease your profitability.
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EXAMPLE A
Wednesday, February 9, 2005
7:10
AM
(PST)
Figure 29.3 shows the S&P e-mini (ES H5) higher-time-
frame 10-minute chart:
Trend is down at 7:10
AM
(PST) on this higher-time-frame chart.
Enter short trades only on the lower-time-frame chart.
7:50
AM
(PST)
Figure 29.4 shows the S&P e-mini (ES H5) lower-time-
frame 1-minute chart:
Entry at 7:11
AM
(PST).
Exit at 7:50
AM
(PST) for a nice profit.
Continue to look for short-trades on the 1-minute chart (as long as the
higher-time-frame 10-minute chart trend remains bearish).
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JWBK099-McDowell
February 22, 2008
17:4
Char Count=
AR
T® Char
t #85;
S&P E-Mini;
T
en-Min
ute
.
FIGURE_29.5'>FIGURE_29.4'>FIGURE_29.3'>FIGURE
29.3
Immediate
Trend
Is
Down
at
7:10
AM
(PST)
on
Higher-Time-Frame
10-Minute
Chart
Source:
eSignal.
www.eSignal.com
194
c29
JWBK099-McDowell
February 22, 2008
17:4
Char Count=
AR
T® Char
t #86;
S&P E-Mini;
One-Min
ute
.
FIGURE
29.4
Entry
at
7:11
AM
(PST)
and
Exit
at
7:50
AM
(PST)
on
Lower-Time-Frame
1-Minute
Chart
Using
the
Primary
Pyramid
Trading
Point
Signals
Source:
eSignal.
www.eSignal.com
195
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197
EXAMPLE B
Wednesday, February 9, 2005
11:30
AM
(PST)
Trend remains down at 11:30
AM
(PST) in Figure 29.5.
Enter short trades only on the lower-time-frame chart.
11:36
AM
(PST)
Figure 29.6 shows the S&P e-mini (ES H5) lower-time-
frame 1-minute chart:
Entry at 11:01
AM
(PST).
Exit at 11:36
AM
(PST) for a nice profit.
c29
JWBK099-McDowell
February 22, 2008
17:4
Char Count=
AR
T® Char
t #87;
S&P E-Mini;
T
en-Min
ute
.
FIGURE_29.7'>FIGURE
29.5
Immediate
Trend
Is
D
own
at
11:30
AM
(PST)
on
Higher-Time-Frame
10-Minute
Chart
Source:
eSignal.
www.eSignal.com
198
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JWBK099-McDowell
February 22, 2008
17:4
Char Count=
AR
T® Char
t #88;
S&P E-Mini;
One-Min
ute
.
FIGURE
29.6
Entry
at
11:01
AM
(PST)
and
Exit
at
11:36
AM
(PST)
On
Lower-Time-Frame
1-Minute
Chart
Using
the
Primary
Pyramid
Trading
Point
Signals
Source:
eSignal.
www.eSignal.com
199
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200
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201
EXAMPLE C
Wednesday, February 9, 2005
After the Close
Figure 29.7 shows that the trend remained down
throughout the trading day on the higher 10-minute chart. Look for short
trades only on the lower-time-frame chart.
12:50
PM
(PST)
Figure 29.8 shows that trading with the trend on a
higher time frame allowed only short trades.
S&P e-mini (ES H5) lower-time-frame 1-minute chart:
Entry at 12:50
PM
(PST).
Exit near close of market for a small profit.
c29
JWBK099-McDowell
February 22, 2008
17:4
Char Count=
AR
T® Char
t #89;
S&P E-Mini;
T
en-Min
ute
.
FIGURE
29.7
Immediate
Trend
Is
Down
at
12:00
PM
(PST)
on
Higher-Time-Frame
10-Minute
Chart
Source:
eSignal.
www.eSignal.com
202
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February 22, 2008
17:4
Char Count=
Go Shor
t Here
06:30
02.03.05
07:00
08:00
09:00
07:30
08:30
09:30
10:00
11:00
12:00
02:10
06:33
10:30
11:30
12:30
Go Shor
t Here
Go Shor
t Here
Go Shor
t Here
Stopped-Out Here
F
or A Small Loss
Stopped-Out
Here F
or A Profit!
Bullish “Pyr
amid
T
rading
P
oint
”
NO
TE:
Do NO
T
T
ak
e An
y Long-T
rades
While The T
rend
Is
Bear
ish
On The
Higher
Time F
rame 10-Min
ute Char
t
Stopped-Out Here
F
or A Profit!
Exit At End Of
T
rading Da
y!
S&P Emini Da
y
T
rade
Lo
wer
Time Frame - 1 Min
ute Char
t
Pub
lished b
y eSignal (www
.esignal.com)
V
olume
120840
120640
120431
120240
124040
119040
115640
115440
105225
105040
5805
P
P
P
P
P
P
MP
P
P
P
AR
T® Char
t #90;
S&P E-Mini;
One-Min
ute
.
FIGURE
29.8
Entry
at
12:50
PM
(PST)
and
Exit
at
Close
of
Market
1:00
PM
(PST)
Using
the
Primary
Pyramid
Trading
Point
Signals
Source:
eSignal.
www.eSignal.com
203
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C H A P T E R 30
Other Filter
Techniques
T
his chapter has a variety of popular filters that can be used with the
ART software. Remember that these filters are not the “Holy Grail”
and are not required to be profitable using the ART software. They are
listed here to give you some advanced techniques to experiment with after
you have mastered the ART basics. Be sure to paper-trade these techniques
prior to going live in the market.
FILTER FOR TRADING THE E-MINI
Use the spread between the NQ contract and the ES contract as a means
to help confirm ART trading signals: An increasing spread confirms an up-
trend, while a decreasing spread confirms a downtrend. Spreads are repre-
sented on a chart with a line instead of individual price bars. Enter trades
only when confirmed by the spread. A spread goes up as the Nasdaq index
(NQ) outperforms the S&P index (ES).
In a bullish market environment, money flows faster into high-growth
companies as represented by the Nasdaq market, and thus the spread in-
creases upward. In a poor market environment, money flows faster into the
safer S&P stocks, and thus the spread decreases downward.
For lower time frames like the 1-minute intraday periods, you may
want to try using a higher time frame like a 5-minute or 15-minute spread;
1-, 3-, and 5-minute spreads can at times be too sensitive and therefore jump
around too much to be helpful.
Figure 30.1 illustrates how the NQ-ES spread can work.
205
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February 12, 2008
14:50
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AR
T® Char
t #42;
Left Side of Char
t:
Nasdaq 100 E-Mini & S&P E-Mini;
Fiv
e-Min
ute Spread;
Right Side of Char
t:
S&P E-Mini;
One-Mi
n
ute
.
FIGURE
30.1
Using
The
NQ-ES
Spread
to
Confirm
ART
Signals
Source:
eSignal.
www.eSignal.com
206
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Other Filter Techniques
207
ACCUMULATION/DISTRIBUTION
Charting platforms usually have this as a standard indicator. In using this,
you are not forecasting but confirming ART signals. Figure 30.2 illustrates
how to use accumulation/distribution to confirm the ART signals.
USING ON-BALANCE VOLUME (OBV)
Most charting platforms usually have this as a standard indicator. In using
this, you are not forecasting but confirming ART trading signals. Figure 30.3
illustrates how to use OBV to confirm the ART signals.
PRICE OSCILLATOR HISTOGRAM
Price oscillators are usually standard with most charting platforms. They
can be used to confirm ART trading signals. Figure 30.4 illustrates how we
use the price oscillator histogram to confirm the ART signals. Figure 30.5
is another chart illustrating how you can use the price oscillator histogram
to confirm the ART signals.
P R I C E
O S C I L L A T O R
H I S T O G R A M
S E T T I N G S
1.
Short length to 5
2.
Long length to 35
3.
Source to low
4.
Set to “histogram”
When using the price oscillator histogram as a filter, there are four ART
methods:
1. A.
Go long
when the histogram is increasing relative to its previous
histogram bar at the time of an ART trade entry.
B.
Go short
when the histogram is decreasing relative to its previous
histogram bar at the time of an ART trade entry.
2. A.
Go long
when the histogram is above the zero line and increasing
relative to its previous histogram bar at the time when prices are trig-
gering a trade entry.
c30
JWBK099-McDowell
February 12, 2008
14:50
Char Count=
AR
T® Char
t #53;
S&P E-Mini;
Thir
ty-Min
ute
.
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