After witnessing the so-called largest wealth destruction in financial history in early 2008, we can feel the pain that many investors/traders had been suffering. Back then, we’ve said that: “we wish that we could paint a perfect roadmap for all of us to live and trade by.” And here we are, after toying with the “BIG MONEY” concept, we came up with simple but powerful ‘Trading Map‘, which “tells” us when to get in and out of the market.
The graphic below shows the short-term trading range for the SPDR S&P 500 (SPY). As shown, the sky-blue shading represents the neutral trading range. A move above or below that range is considered mild overbought (as represents by the pink shading) or mild oversold (as represents by the green shading). A move into the red shading is considered extremely overbought while a move into the dark-green shading is considered extremely oversold.
The concept here is very simple. If prices are pained in green, then BIG MONEY are BUYING, so traders are better off buying stocks. And if prices are red, then BIG MONEY are SELLING, and thus we should sell stocks or at least get out of the market. If the prices are painted in yellow, then the market is in Neutral or sideways trend as BIG MONEY re-positioned. So it’d be wise to sit on the sideline.
Chart 1.1 – SPDR S&P 500 (daily chart).
Above is the updated version of our “Trading Map”. It is very easy to read. Look at the area ‘A’ on the chart. It’s indicated current market climate (where we are) and which direction the market’s likely headed over the next couple of days.
As shown, the SPDR S&P 500 (SPY) shown nice gains when it’s in bullish trend (prices in green) and did really bad – suffered significant lost – when prices are painted in red. SPY was mostly range bounce when prices are pained in yellow.
So, if you’ve bought SPY in early March and August 2009 (see area “I” and “II” in the chart) when the trend was bullish you should have make a killing. Also notice that the trend turned bearish a couple of days ahead of the May 2010 ‘flash crash’. If you’ve sold the SPY immediately followed our bearish signal, then you must be sitting on a “fortune” right now.
So, the message is clear: when it comes to trading, do what market “tells” you, and in this case – just follow the ‘Trading Map’.
As you can see, our “Trading Map” is the ideal trading tool for all type of traders/investors. It’s designed to help traders to become more consistent and more confident.
Understanding that Holly Grail does not exist in financial world, we’re planning to update/improve the system constantly over time to serve prospective and new subscribers. But rest assure, after a couple of thorough visual back-test, the system appeared to work “very well”.
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