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

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

In the example below, you can see how this trading system was used to go short the S&P 500 e-mini. In this example, a 5-point decline was pre-determined as a satisfactory profit target; a advance of 5 points was set as the stop-loss level. When one hour remained in the trading day we reduced the target profit level from 5 points to 2 points.

Chart 1: Establishing a short position based on the SBV indicator.
S&P 500 E-mini. VMA1 = 30-min

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).