Trading with the original 'HotLaserTrade' Equation

HotLaserTrade's Original HotLaserTrade Equation Calculator is for experienced traders. The original HotLaserTrade Equation involves you in trading both with and against the trend, using simple rules based around price penetration of the L3 and L4 levels. It relies on the fact that success in intraday trading requires you to enter and exit trades with the backing of major support or resistance; the positioning of this resistance being determined by the equation.

To use the original HotLaserTrade Equation, you enter yesterday's open, high, low and close. The calculator then gives you (to 2 decimal places) 8 levels of intraday support and resistance. There are 4 of these 'L' levels above yesterday's close, and 4 below. They are numbered L1, L2, L3 and L4.

Long or Short with the original HotLaserTrade Equation

As you can see, trading with the original HotLaserTrade Equation is quite simple. The important levels to note are the 'L3' levels, where you take action, and the 'L4' levels that act as your stoploss points. How you specifically enter a trade depends to a great extent on the way the market opens.

Market Open INSIDE 'L3'

The following applies both to going 'Long' and going 'short'. If the market opens INSIDE the L3 levels (i.e. BETWEEN the higher L3 and the Lower L3), you must wait for price to approach either of these two L3 levels. Whichever L3 it hits first determines your trade.

If the HIGHER L3 is hit, you go SHORT (against the trend) in the expectation that the market is about to reverse. The original author of the Equation recommended using the higher 'L4' level as your stoploss point, although HotLaserTrade recommend you 'know your market' and set the stop at a distance that you are comfortable with.

HotLaserTrade would also recommend that you wait for price to bounce back down inside the L3 level again before entering the trade, as you will therefore be technically trading WITH the short term trend. A fair amount of experience is needed for this style of trading.

The opposite, of course applies if the LOWER L3 level is hit first - wait for it to come back inside the lower L3 level, then go LONG.

Market Open OUTSIDE 'L3'

In this case, you wait for the market to retreat back thru the L3 level - you will then be trading WITH the trend, and once again, the original author of the Equation recommended using the L4 level as your stop loss (although perhaps the best day trading tip HotLaserTrade can give you on this topic is to recommend using a sensible stop based on your knowledge of your market, or failing that, the value offered by the {b} version of the Equation)..

Taking profits is a matter of personal judgement - just be aware that you WILL want to take profits at some time during the day, because the market is unlikely to 'behave' and stay right-sided for your trade.

The original author of the equation has claimed that these reversals from L3 happen as often as 4 times out of 5 during intraday trading.

Using the original Equation to trade 'breakouts' is also eminently possible, and essentially involves you going LONG if price penetrates UP thru the higher L4 level, or going SHORT if price penetrates DOWN thru the lower L4 level.

The L4 levels, by the way, usually correspond well with the {b} version 'Go' levels, and up to 40% or more of the day's range can be captured in such a 'breakout' fashion.