Daytrading With Camarilla Equations and Levels

When people begin day trading for the very first time in their lives, they are bound to lose money everyday. Or at least on most of the days. The losses will always be too much for them to digest. Actually this stage acts as a filtration – many will frown and leave the arena while the rest try to survive the battle.

There is a stage in every trader’s life when they will hunt for the so-called “holy grail”. They will notice that everyday, the market will move and touch certain price levels only to reverse or bounce back to where it originally started. This happens almost every day in all the markets.

When I was first introduced to the Camarilla Equation, I was spellbound. Using yesterday’s high, low and closing price, we could determine the movement of the market (for the next day) – this is the entire idea behind the so-called equations. Once I came across these equations, I decided to check it out by myself the following day. I noticed that the stocks / index futures would follow the equations beautifully on certain days. On most of the other days, it would simply hover around these points and fall down / rise up drastically. Search around and you will come across hundreds of blog posts and forum threads highlighting the usefulness of the equation. But, is it worth it? I decided to give it a test run.

I did something simple – I decided to obtain the information from the horse’s mouth – aka I subscribed for one week trial offer from Surefirething. Why did I do it? There are several “variants” of the equations floating around. According to the official sources, we had to take into account the high, low, close as well as the opening price of the scrip. However, the versions available on the internet took only the previous day’s high, low and close prices. I wanted to know which one among these were the real deal. I thought the equations available freely on the inter-webs were not working as envisaged because we omitted the opening price while calculating the levels. The only way to find it out was to spend $99 for the trial service. And I did the same.

Now, I was fairly disappointed once I was admitted into the “members area” of the website. I started experimenting with the paid service to find out which one of the equations available for free were accurate. Of the four variants, only one gave the most accurate values. The rest of the versions of the equations displayed approximate values only. Secondly, the high / low breakout targets given by the website and the equations (which you will come across) are different. These were the only information which I was able to learn via the trial offer. No, I was not able to deduct the equations (for the high / low breakout targets) myself.

One thing is for certain – I wouldn’t be touching these equations with a ten foot pole for day trading purposes. Day trading is an art, something which cannot be expressed with a set of equations. There exists a unique relationship in between the price and the time. And this friendship in between the two keeps on changing as the day progresses.

I have come across several blog posts stating that banks and large financial institutions use these equations to day trade and make millions. The entire financial architecture of the globe would fail if it were true!

I hope this post is informative for those who are currently day trading with these equations. Lastly, I do not intent to ridicule their services. Feel free to trade with it and you will realize the truth for yourselves!

Oh and lastly, here are the equations if you are interested in them.

HL5 = (hi/lo)*close
HL4 = ( ((hi/lo)+0.83)/1.83 ) *close
HL3 = ( ((hi/lo)+2.66)/3.66 ) *close

LL3 = close – (HL3-close)
LL4 = close – (HL4-close)
LL5 = close – (HL5-close)

About Praveen Pious Francis
A part-time blogger who has a wide range of interests including investing in the stock markets across the globe and broadband technologies in India. If you feel that this post has helped improve your daily trading activities, please consider donating to my PayPal Donations encourage me to keep on researching newer day trading strategies.

7 Responses to Daytrading With Camarilla Equations and Levels

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  5. Robin says:

    You should check out the work by Mark Fisher – The logical trader and also a book called Pivot Book.

    You can use it in tandem with camarilla levels.

    Good luck!


  6. Very educational, nice one for keeping us updated pertaining to your trading progression.


  7. Pingback: Toby Crabel Opening Range Breakout | Candid Writer

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