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11/15/2015

HowtoPickIntradayMarketDirectionThe80%Rule

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INO.comTradersBlog
ExpertCharts,TradingTipsandTechnicalAnalysisfromINO.com

HowtoPickIntradayMarketDirectionThe80%Rule
December29,2011ByJeremyLutz

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570

Ifyoufollowourblog,thenyouaredefinitelyfamiliarwithtraderLarryLevin,
PresidentofTradingAdvantageLLC.Wehavegottensuchagreatresponsefromsomeofhispastpoststhathe
hasagreedtoshareonemoreofhisfavoritetradingtipsasaspecialtreattoourviewers.Determiningthe
directionofthemarketcanbetrickyandjustplainconfusingattimes,butLarrysexpertopinionkeepsitsimple.
Ifyoulikethisarticle,LarrysalsoagreedtogiveyoufreeaccesstohisDoubleStoptradingtechnique.
LetmeintroduceyoutoonesimpletechniqueI'veusedtopickintradaymarketdirectionwith80%accuracy.
Wouldyouliketoknowifaparticulartradehasan80%probabilityofworking?Wouldyouliketoknowexactly
wheretoenterthattrade,andwheretoexit?Wouldyouliketotradethistechniquewitha2pointstoplossor
less?
ItDoesn'tMatteriftheMarketisGoingUporDown,ThisSimpletoLearnMethodHasaHistorical
Accuracyof80Percent!
Usingjusttwokeynumberseachday,floortradersandotherprofessionalscantrytopickthedirection,entry
price,stoplossandtargetpriceofaparticulartrade.Itdoesn'tmatterifthemarketisgoingupordownthis
simpletolearnmethodhasahistoricalaccuracyof80%.Infactit'scalledthe80%Rule.
http://www.ino.com/blog/2011/12/howtopickintradaymarketdirection%E2%80%93the80rule/#.VkjDgdIrLIU

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11/15/2015

HowtoPickIntradayMarketDirectionThe80%Rule

Eachmorningyouwillknowwhatthosetwokeynumbersare.Then,ifthesetupiscorrect,simplyenterthe
trade,setyourstops,setyourtargetpriceandsitbackwithatradethathasan80%expectancyofhittingthe
target.Whatcouldbeeasier?
Herearethebasicsforthe80%Rule:
TheValueArea(SecretTip#12):Therangeofpriceswhere70%ofyesterday'svolumetookplace.For
instance,ifthevalueareaintheS&Psis138500139000,then70%ofthepreviousday'svolumetookplace
betweenthepricesof138500139000.
The80%Rule:Whenthemarketopensaboveorbelowthevaluearea,andthengetsinthevalueareafortwo
consecutivehalfhourperiods.Themarketthenhasan80%chanceoffillingthevaluearea.

Thevalueareaandthe80%rulecanbeexcellenttoolsforjudgingpotentialmarketdirection.Manytraders
familiarwiththevalueareaandthetechniquesthatgoalongwithituseittohelpthemdecidewhattradestodo
eachday.
Acoupleofkeypointstoremember:
Ifthemarketopensabovethevaluearea,trytoenterashortpositionascloseaspossibletothetopofthe
valuearea.
Conversely,ifthemarketopensbelowthevaluearea,aimtoenteranylongpositionascloseaspossibletothe
bottomofthevaluearea.
Onceyougetusedtoit,youwillfindthatusingthevalueareaeachdaywillbevaluableinyourtrading.
(Punintended!)
The80%ruleisasimplewaytoridethemarketasitpotentiallyfillsthevaluearea.However,thereisan
http://www.ino.com/blog/2011/12/howtopickintradaymarketdirection%E2%80%93the80rule/#.VkjDgdIrLIU

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HowtoPickIntradayMarketDirectionThe80%Rule

exceptiontobealertfor.Ifitthemarketopensabovethevalueareaandthengoesaboveorbelowit,the80%
rulecanstillcomeintoplay.Watchforittogetbackintothevalueareaforthoseimportanttwoconsecutive
bracketsor30minutebars.
ClickheretoseeLarrysDoubleStoptradingtechnique.
BestTradestoyou,
LarryLevin
Founder&PresidentTradingAdvantage
Disclaimer:Tradinginfuturesandoptionsinvolvesasubstantialdegreeofariskoflossandisnotsuitablefor
allinvestors.Pastperformanceisnotnecessarilyindicativeoffutureresults.

570
FiledUnder:GuestBloggersTaggedWith:LarryLevin,marketdirection,MarketClubTechniques,technique,Tips&Talk,TradingAdvantage,
trends

Comments
Chucksays:
January2,2012at4:14am
Hi,forthosewhodon'tknowmeasIamknowonmanyfinancialsites,Ithinkshorttermtradingisthewayto
go.Howevertodoshorttermtradingyouneedhelp.First,youaretiedtothecomputer.Second,yourmind
hastobeclear.Thirdyouhavetosureofyourmethodandnotgiveasecondthoughttowhatyouaredoing.
Astopredictionofpricemovements.Lookingattheremarksheremostofthemembersareintolotsoflagging
indicatorsthattrackpriceorconfirmamovement.PersonallyIdon'tlikebeinglateforanything.Thesemethod
bydefinationarelate.Astovalueareas,thismethod,seemsokifthemarketshaveagravitytothisareas.It
seems,althoughIamnotsureofthis
thatyoutakeashortpostionagainstthevalueareaifthemarketopensabovethisarea,andyouusethestop
outastheborderoftheareaonthetoponcethepriceentertheareaandwait1/2hour,notsurefromthetime
themarketmovesdownorfromthetimethetopisreached(firsttop)whoknows.
Tobehonestwithyouallifyouactuallycantradethisfor80%correctmoves
Iwouldbeverysurprised.ItistooiffyforwhatIread.Thecloseoutforprofitmovewithbeafterthe1/2hour.I
stillamnotsureofwhenthis1/2hourstartssoIdon'tknowwhereitends.
ShowmeGanntradersandmarketmappersandshowmeturningpointsinadvance.
Yes,Ihaveananswerforallofthis,butdoineedhelptoautomateit.

Chucksays:
January2,2012at3:42am
Howdoyougetvolumetofigureoutthevaluezone.Thepointthatthisatbestcouldbeverytimeconsuming
unlessyouhavesoftwarethatcomputesthis.
Iguessyoucanguessthiswithascattergramchartwithvolontheyaxisandpriceonthexaxis.onlythex
axishastobeadjustedforvoltimethenumberofshareorcontracts.Obviouslythisrequiresprogrammingand
ispossiblebutifyoudon'thaveaprogrammerwhoworkscheapyouareout
http://www.ino.com/blog/2011/12/howtopickintradaymarketdirection%E2%80%93the80rule/#.VkjDgdIrLIU

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HowtoPickIntradayMarketDirectionThe80%Rule

JohnEgansays:
January1,2012at10:19pm
Wouldn'tworryaboutovernightasitshouldhaveconsiderablylessvolumeanyway.

denniskingsays:
January1,2012at12:53pm
TheVAisbasedonnormaltradinghours,notonovernighttrading.
LevinrecommendsgoinglongorshortasclosetotheextremityoftheVAaspossiblewitha12pointstop.This
doesnotworktoowellforlowvolumetradinglikeovertheholidays,butitworkedfairlywellon12/30.VAwas
1257/1250.50basistheMarchEMini.InthemorningittradedwithintheVAmeetingcriteriaatthe10AMbar,
butralliedbackto1259.00stoppingoutashortat1257.00.Itthencontinuedtomeetthecriteria,andtraded
downto1252.50between1:302:00PM,butthenralliedto1256.25beforetradingaslowas1251.25nearthe
close.
TargetpricecanbetheotherextremeoftheVA,butcangolower/higher.PivotpointsandSP500
support/resistancelevelscanalsobeutilizedtojudgetargetarea.Besttouseabreakevenorbetterstoponthe
secondcontractaftertakingprofitsataninterimtargetonthefirstcontract.Tryfora2.53.0risk/rewardratio
basisa1pointstoponthefirstcontract.Anyway,thatishowIthinkofit,butperhapsothersdoitdifferently.

Andrewsays:
January1,2012at10:27am
Interesting....
Arethetargetpriceandthestoplosspointstheextremitiesofthevaluezone?
IuseInteractiveBrokers,whichprovidesrealtimeandverylowcommissions.Usingtheeminiisthevalue
zonedeterminedbasedonthefulldaytrading(includingovernightaction)?orjustonthenonoutsidenormal
tradinghours?

denniskingsays:
December31,2011at11:32pm
metoo,thanks

marcsays:
December31,2011at8:35pm
Thanks,John.IhaveTOSsoIwillcheckitouttoseehowhelpfulitmightbe.

JohnEgansays:
December31,2011at5:37pm
LOL!..MonthsagoIcheckedoutthissystemandhadtheverysamequestion..Sure..IfItooktimeandsales
http://www.ino.com/blog/2011/12/howtopickintradaymarketdirection%E2%80%93the80rule/#.VkjDgdIrLIU

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HowtoPickIntradayMarketDirectionThe80%Rule

fromyesterdayandranthemthruaspreadsheetIguessIcouldmassagethenumbersandcomeupwiththe
'valuearea'..ButItradeavarietyofstocksanditwascompletelyimpractical.
Ihavebeenplayingwith'VolumeByPrice'whichisavailableonStockCharts.comasanupperindicator.
Unfortunatelytheirchartsonlyshowdailyorweekly,soalthoughyoucancheckfor'headroom'or'vacuums'in
thevolumeatcertainprices,youcan'tseethoseareasonsaya5minutechart,soitwouldnotworkforthis
system.
However,ThinkOrSwimofferstheirplatformforfreeandtheydoimplement'VolumeProfile'asoneoftheir
studies.Applyitforanychartonthe1minutetimeframeandyougetatopandbottomofthevalueareaanda
'POC'whichprettymuchcorrespondstothemostactivelytradedtimeframe.Prettyeasytosee.
Luck!jegan

denniskingsays:
December31,2011at3:44pm
ifyouhaverealtimequoteswiththevolumetradedateachpriceontheEMini,youcandothosecalculations,
butIdon't.Fortunately,BarryLevinpublishesthosenumbersinhisdailypremarketnewsletterwhichanyone
cansignupfor.Heandhistradersalsohavewebinarsandprovideatrainingprogram.Theyevidentlyhaveupto
12techniquestheyuse.Iusethepivotpoints,the80%rule,onetimeframing,and'readingthetape'usingthe
MACD,slowstochastics,andW%Ronthe30,10and5minutechartstotradetheSPYcallandputoptions.
YouhavetoextrapolateabitasMarketclubprovides20minutedelayedquotes,butIalsohaveIRAaccounts
withFidelitysohaveaccesstorealtimequotesfromthem.WithmyHPlaptop,Idoalright.IamretiredsoI
don'thaveadayjob.Iwouldnotadvisedoingitunlessyouareabletodoitfulltime.However,thesetechniques
haveprovidedmewithsomeexcellentpositiontrades,andoneadvantageofusingtheoptionsis'stayingpower'
sothatthereistheoptionofcarryingapositionovernightorlonger,somethingoneprobablywouldnotwanttodo
withtheEMiniwiththeovernightswings.

marcsays:
December30,2011at5:13pm
Dennis,howdoyoudeterminethepriceareawhere70%oftheprevdaysvolumeoccurred?

denniskingsays:
December30,2011at4:33pm
the80%ruleisbasedontheEMini.Thevalueareaisthepriceareawhere70%ofthepreviousdaysvolume
occurred.ItisakillerindicatorfortradingtheEMiniwithlowriskentrypoints.Oneneedsrealtimepricesfor
bestuse.ThePOC(pointofcontrol)isinthevalueareaatthepricewherethehighestvolumetookplaceand
actsasapivot.

LanceJsays:
December30,2011at10:34am
Here'swhatIthinkwouldbeawesome.Ifthiswasreallyaccurate80%ofthetime,ifMarketClubcouldaddthis
totheSmartScanareaformemberssayrightunderStrongDMAsomethingthatsaid80%Rule.Itwouldthen
scanandreturnallstocksthatwerebuysignalsonthe80%rule.
http://www.ino.com/blog/2011/12/howtopickintradaymarketdirection%E2%80%93the80rule/#.VkjDgdIrLIU

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11/15/2015

HowtoPickIntradayMarketDirectionThe80%Rule

Imeanthinkabout.Ifitreallywasright80%ofthetime,thiswouldbeextremelyvaluablenotonlyformembers,
butforMarketClubaswell.Imaginethekillermarketingyoucoulddoforasystemthatwasright80%ofthe
time.Itcouldsupplementthetradetrianglestechnologynicelyastheytendtobecomelessusefulintrading
marketslikethekindwe'vebeenin.Inatradingmarket,youjustswitchovertothe80%RuleSmartScan.

dpsays:
December29,2011at7:20pm
isthevalueareasimplythepreviousdayhigh/lowrange

SchuylerHalessays:
December29,2011at4:54pm
needsecrettip#12............pleaseinformhowtoobtainthis

RCMsays:
December29,2011at3:56pm
Averyinterestingtip.butasMrGicenoted,itwouldbealotmoreusefulifMarketClubwouldoutlineaswellthe
processfordeterminingthefiguresyouareworkingwith.Pleaserespond.
rcm

MrGicesays:
December29,2011at1:15pm
Howisthe"ValueArea"determinedandcanthisbeappliedtooil?
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