Ilmu Saham | ISX Stock Market Resource Center

Larry Williams OOPS System

Posted in Trading Resources, Trading System, Tutorial by ilmusaham on May 27, 2008

Larry Williams OOPS System….

I also posting the system definitions….

Please have a look and revert with interpretations
….

//OOPS system
//A first Attempt
//A Second Attempt

SetTradeDelays(0,0,0,0);

shortsetup=Open > Ref(H,-1);
buysetup=Open < Ref(L,-1);

ShortPrice=ValueWhen(shortsetup, Ref(H,-1));
BuyPrice=ValueWhen(buysetup,Ref(L,-1));

Buy=buysetup AND BuyPrice;
Sell= C;
Short=shortsetup AND SellPrice;
Cover= C;

Equity(1);

Filter=1;
AddColumn(IIf(buysetup==1,BuyPrice,0),”BuyPrice”);
AddColumn(IIf(shortsetup==1,ShortPrice,0),”ShortPrice”);
AddColumn(Shortsetup,”ShortSetup”);
AddColumn(Buysetup,”BuySetup”);
/***************************************************/

SYSTEM DEFINITIONS:

This system by Larry Williams..I believe ( was / is ) set up to be a day Trading system…

Here is what I have in the way of the systems definitions.

The OOPS system:
While originally conceived as a day trading system, Larry now prefers to trade it past the end of the day, holding his position sometimes for 2 or 3 days.

The SETUP:
To trade OOPS, just watch the open. You will have a potential trade any time a market opens by gapping above the previous day’s high or gapping below the previous day’s low.

  • If the open is above the previous day’s high, you have a potential SELL. (… Shortsetup=Open > ref(High,-1)…) .
  • If the open is below the previous day’s low, you have a potential BUY.  (…Buysetup=Open < ref(Low,-1)…).

What you are looking for is the market to close the Gap. At approximately that point, you enter your position and hold until the close.

The theory of the trade is that the gap is caused by the public being too enthusiastic on the opening and causing a gap that cannot be sustained. When the gap closes, those on the wrong side of the market say, OOPS, and rush to cover their trades. This causes an increase in momentum that lasts for the rest of the day.
There are several issues to consider in trading the system. First is the question of how big the gap should be before a trade becomes attractive. Obviously, the smaller the gap, the less attractive the trade appears and the more difficult it is to execute. Therefore, you should require some minimum size opening gap before you would consider a trade.

The ENTRY:
Second is the question of exactly where do you enter. Larry recommends entering at the previous day’s extreme, exactly at the point where the gap is closed. …..( ******….I believe my original code logic posted last night was in error here (…

BuyPrice=ValueWhen(shortsetup,Ref(H,-1))…) or
(…ShortPrice=ValueWhen(buysetup,Ref(L,-1))…)….should have
read..(buyprice=valuewhen(buysetup, ref(L,-1)) and
shortprice=valuewhen(shortsetup,ref(H,-1))….***).

The PROTECTIVE STOP:
Third is the question of a protective stop. Of course, you should always use one. A natural point would be the day’s extreme high at the time you go short or the day’s extreme low at the time you go long. A money management stop to risk a fixed dollar amount would also be appropriate.

A suggestion could be to place a stop below the low of the day at the time of entry for long trades, and above the high of the day at the time of entry for short trades. If this stop is too large, yoiu can substitute a money management stop ( expressed as a dollar amount ) of whatever size is comfortable for you and your account size. If you are not willing to risk at least $ 1000.00, you should probably not trade with this approach without further testing to see if it does work with smaller stops.

Some Notes:
Do not attempt to filter the system by trading in the direction of the longer-term trend. This is a concept you will see in most day trading literature. It is an intuitively attractive idea, but research shows the longer term trend has no significant effect on day trading.
An easy way to increase profits is to wait until the next day’s open to exit. By holding overnight research has showed that profitability increased by as much as 50%.

Source: Anthony Faragasso

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: