Camarilla Equation – 1


Too much of misinformation exists about this excellent trading technique. Even the origin of the set of equations is somewhat obscure. Not many traders will be aware of the fact that the original URL that advertised this trading equation was ipickedcrash.com. This website does not exist anymore. Today, you will find two other official websites (www.camarillaequation.com and www.surefirething.com) trying to sell the same equation to the interested parties.

Using the previous day’s high, low and closing price, these equations will provide six different levels to the day traders. The traders can use the same set of equations to trade on a monthly or yearly basis too.

Back in the days before the intelligent traders could reverse engineer the equations, this trading system truly seemed to be mysterious. Using three parameters (the high, low and the closing price), it could accurately highlight some levels that the day traders need to have in their minds before placing trades.

Someone name ig0r cracked these equations by 2004 and because of his efforts, we now have direct access to the equations.

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)

Ideally, when the price touches HL3, you need to short while setting HL4 as the stop loss. Once the price manages to touch HL4, you should go with the trend and buy at that level while keeping the target at HL5. The stop loss for this long trade will be HL3.

Likewise, if the price touches LL3, you will have to trade against the trend by buying at that level. Keep the stop loss at LL4. Again, if the price touches LL4, sell while keeping LL3 as the stop loss and LL5 as the target.

The beauty of Camarilla Equation is somewhat self evident. It allows the day traders to exercise discipline while taking their chances with the market. Unlike several other trading systems that you might come across, over here you will get clear-cut information about when to stay on the sidelines / when to jump in and place a trade / when to escape if the trade goes against the system. Stick with it for a long time and you will see the profits flowing into your trading account. The main problem is people get impatient if the equation does not give them profits for a week or so. They jump ships and end up losing money miserably. This is why I emphasize on that fact. Stick with the equation and you will definitely thank me for this post. You should not do anything if the price does not touch HL3 or LL3 on any given day.

There are several interesting trivia for this trading system.

  1. The current official sources maintain that a bond trader named Nick Stott discovered these equations. However, this is untrue. The roots of this equation came from a Canadian called M. B. Kurzencwyg by 1990.
  2. The present sources also sell another version of the equation called camarilla {b}. Until this day, no one has managed to crack it.
  3. At a point of time, a small part of the equation was listed for everyone to see in ipickedcrash.com. I am guessing ig0r must have used that opportunity to crack the code! https://web.archive.org/web/20041208122230/http://www.ipickedcrash.com/freecalculation.html
  4. By 2006, M. B. Kurzencwyg released another trading method called System 3000. No one has managed to reverse engineer this trading method too. Here is what he has to say about System 3000, “THE SECRET BEHIND SYSTEM 3000 LIES IN A MARKET’S OPENING TICK. THE DIRECTION OF A MARKET CAN BE SUMMARIZED WITHIN THE FIRST 1O SECONDS OF TRADING”

If you wish to know more about this equation, please go through The Day Trader Handbook, written by no one other than M. B. Kurzencwyg himself.

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One Response to Camarilla Equation – 1

  1. Pingback: Toby Crabel Opening Range Breakout | Day Trade 101

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