S&P 100 Trading System

S&P 100 Investing & Trading System

S&P 100 Technical Analysis

Introduced in 1983, S&P 100 measures large cap company performance. Often known by its ticker symbol SP100, it is made up of 100 major, blue chip companies across diverse industry groups. The primary criterion for index inclusion is the availability of individual stock options for each constituent.

S&P 100 Index Stock Technical Analysis Rules

A trading system is created by generating signals, setting up a decision making procedure, and incorporating risk management into the system. A trading system is supposed to be objective and mechanical. The analyst combines a set of objective trading rules (usually in a formula(s) or algorithm(s)).A technical analysis indicator is used to determine the trend of a market, the strength of the market and the direction of the market. A technical analysis indicator may be specific or non-specific. Some technical analysis indicators can be quantified in the form of an equation or algorithm. Others show up as patterns (e.g. head and shoulders, trendlines, support and resistance).

As a general rule, good technical analysis indicators are the building blocks of good trading systems. However, as previously mentioned, even good technical analysis indicators can lose their validity when combined in a trading system. Therefore, it is important to not only back-test your system but to also forward-test your system in real time.

To understand better a trading system we display below a chart with illustration of the simplest trading system which has two rules only: when to buy and when to sell. This system uses volume technical analysis - SBV Flow (Selling Buying volume Flow) technical indicator shows us money flow and the bullish and bearish pressure. Based on this knowledge the one may assume with certain degree of confidence the most possible future trend development. The general rule for the SBV Flow is to buy when SBV Flow turns positive and to sell when SBV Flow turns negative.

Chart #1: Example of the simple S&P 100 trading system based on the SBV Flow: