Emini. S&P 500. Russell 2000. Futures. Charts.

(B) For entering long positions:

1. Once the SBV indicator has dropped below minus 66% (the SBV indicator will show green), wait for it to rally above that level, then enter a long position;
2. Take profits once the price / index has risen to your pre-determined profit target level OR when the SBV indicator exceeds plus 66% (the SBV indicator will show red), whichever occurs first;
3. Take losses if the price / index declines below your pre-defined stop loss level.

Chart 1: Using the SBV Indicator to Trade the Dow Jones E-mini

Important: The 66% level for the SBV indicator was determined in relation to the prevailing market conditions at the time the examples above were selected. In order to establish the optimal critical levels for the SBV indicator, a trader should consider the current market situation and review a chart history of prior volume surges including their magnitude (i.e., the level the SBV indicator reached). Furthermore, it is important to look at more than one chart and to use multiple timeframes. For instance, while a volume surge may look imposing and appear to be critical on a 2-hour or a 1-day chart, the very same surge may not look nearly as significant on a 5-day chart. A prominent surge appearing on a 1-day chart could well affect index levels and bring about a one to five point reversal. In contrast, a prominent volume surge on a 5-day chart may prompt a reversal of 5 to 10 points.