MOF stands for Money on Floor. It is just a fancy name for a pure price action trade. The MOF takes a high percentage trend trade.
The purpose of a MOF is to:
Catch the first lower high in an up trend.
Catch the first higher low in a down trend.
1. Note price is making a lower high at point 1 after making a lower low - trend has changed from up to down.
Bar high has tagged the upper Bollinger Band.
Bar colors are red showing the long term Stochastic in the 2X Study Window has the %K lower than the %D.
2. In the 2X Study Window note the following at point 2:
The long term stochastic - two red lines - have rolled over to the downside.
There is still a spread between %K and %D.
The short term Stochastic - the red/yellow and green lines - have pulled back along with price.
We are looking for a short trade which is in the direction of the long term Stochastic.
It is not necessary for the short term Stochastic to pull back into the sell zone or even cross the longer term Stochastic.
3. In the Bline Study Window note the following at point 3:
The Bline is the black line with the green and red colored dots.
The other 4 lines are referred to as ribbons.
Their relationship to the Bline and their direction is what sets up trades.
The Bline is falling.
The Ribbons have pulled back up to the sell zone - this is only necessary for the 5/3/3 (Cyan and Red lines) as you can have ribbon divergence which is where the 5/3/3 and 9/3/3 do not stay together.
This setup is called the first sell signal with a falling Bline.
We are looking for a short which is in the direction of the Bline.
4: This is the 3rd signal - Hidden Divergence-HD at point 4. (May also be called Reverse or Continuation Divergence)
Price has made a lower high while the MACD histogram has made a higher high.
Note the HD gave you plenty of warning this might be a 3 signal trade as the divergence was present on the completion of the second up bar.
Now it is just a matter of patience until the ribbons get to the sell zone. When these three signals are present, it is a very high percentage winning trade.
When 2X and Bline signals are there, while it is still a high percentage trade, you need to be more aware of what is going on in the higher and lower time frames. One way to trade this would be to enter a sell stop just below the last completed bar. Generally this is called "Stalking the Retracement".
A simple way of describing this setup would be - The first touch of the opposite Bollinger Band after the long term Stochastic has turned:
Long term Stochastic down then touch of the upper Bollinger Band.
Long term Stochastic up then touch of the lower Bollinger Band.
On this chart example, the long term Stochastic is down (bars red) and price tags the upper Bollinger Band. While this setup is shown on a 343 constant tick chart, the setup is the same on any time frame. As with all indicators, the larger moves are on the higher time frames.
The analysis for the MOF is the evolution of a couple of ideas. First there was Buffy's Bline. Then there was Jimmer's 2X. Combined they are called the 2xBline. More information on the 2X Study Window from Jimmer's 2X system can be found at http://www.dacharts.com/2x.php More information on Buffy's Bline can be found at http://www.dacharts.com/b-line.php.
Article by Judy MacKeigan (Buffy)
Editor's Note: The template for this setup can be downloaded from the Ensign web site using the Internet Services tool in Ensign Windows. The template name is 2xBline-35.
| contact us
Ensign Software, Inc., 113 Stillwater Drive, Idaho Falls, ID 83404 Support: 801-328-1382 Billing: 208-552-2230
(c) 2011 Ensign Software, Inc. All Rights Reserved
Last modified 8/4/11 4:02 PM