Rule of 8

Discussion in 'Options' started by mikeenday, Nov 25, 2011.

  1. mikeenday

    mikeenday Guest

    SPY has the consecutive 7 day drop.

    according to rule of 8, there is high probability that a rebounce is expected.

    shorted FAZ today 5 minutes before close to protect QQQ puts.
  2. ammo


    there s a rule of ten,an in house rule that if you push a stock on your clients,and you buy for your personal acct,you have to hold it for ten days,you can't sell it 1/2 a point higher as your customers are coming in,so you will often see a strong turn,or bottoming/topping,move ending or stalling on the tenth day
  3. ammo


  4. ammo


  5. sle


    what on earth is the rule of 8? number of days in decline (as well as number of days on the rise) would be following Poisson distribution.
  6. On SPX since Jan 2, 1990 this "rule" is 1 and 3. One win and three losses.

    Not too reliable.

    Not much of a sample either.
  7. I came across a similar rule by Gann based on his swing charts and stop loss movement. After 7 consecutive bars in one direction the swing chart is no longer used for the stop loss and instead the stop is placed under the low of the 7th bar and moved up with the ascending lows until a low is broken.
  8. spindr0


    The rule of N+1 states that if the rebound doesn't occur on day 8, it might occur on day 9
  9. Then, though, Gann ditched the trade and chart after a break of 50% of the range and/or a ratio. I must have missed that ludicrously overprised neo-wushu course by Elvis from home.
  10. sle


    and if it does not happen on day 9, you should wait for day 10 :) in any case, a simple excel model will prove to you that trading simply on direcitonality of N days prior is not a good strategy - while you will have good winners/losers ratio, the return from the strategy is rather low.
    #10     Nov 26, 2011