Yesterday, I promised a new example of trading only in the direction of prices relative to the daily open.  Figure 1 shows the following: divide the day-session trading day (no Globex) into three equal parts as possible.  This results in 135-minute bars, because the indexes' 405-minute day divides exactly.  If the first two bars of the day closed on the same side of the daily open, buy or sell in that direction.  This is, buy if the close is higher, sell short if the close lower.  Exit on the close.

Figure 1

You see a pretty convincing bias in everything except the currencies.  As is often our way, we're starting out pretty raw and unrefined.  It seems pretty likely we'll be able to tweak some significantly better results out of this.  Alas, I ran out of time this afternoonâ€"this will have to do for now as fulfillment of yesterday's promise.  (This column is a sort of learn-as-we-go experience for everyone, including me, remember.)  At any rate, stay tuned.

The Biases
Hold longs in all three indexes.

The bottom two rows determine the signal.  Dynamic Day One trumps everythingâ€"you always follow it.  When it's neutral, the Monthly Perpetual provides the direction.  Click here for a more in-depth explanation of the rules.

DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented on in this column will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on this column are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

Art Collins is the author of Market Beaters, a collection of interviews with renowned mechanical traders. He is currently working on a second volume. E-mail Art at artcollins@ameritech.net.