Buffy's Classes

MOFs and Slingshots

Class on MOF and Slings by Buffy - Judy MacKeigan Jan 27, 2004

MOF stands for Money on the Floor. The setup catches the first retracement by price after a change of trend. Slingshot and sling setups catch the other retracements by price in a trend.

2X System in the first study window was created by Jimmer and is his system settings.
BLine window is a system I have used way back when trading stoch. BLine was created because I didn't like the ADX going up to show the strength of the down trend in price. Being the newbie I was at that time, I had no clue stochastics weren't meant to do the things I have them doing in the BLine system - third study window.
The MACD settings (7/10/5) were given to me by another trader to try and they have worked quite well for almost a year now.

We will be using a 266T but the setups are the same for any time frame.
Now lets look at this chart.

Chart #1

I just have the 2X LT (long term) stochastic on it - 21/10/4 smoothed.
Notice how the spread increases between K and D as the trend strengthens.
This is what we like to see as a basis for a MOF.

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Now lets add the 2X ST (short term) stochastics - 7/3/3 smoothed.

Chart #2

Notice how it had spread between K and D, retraced and then reversed to the direction of the LT stochastics.

This chart shows you the MOF for the 2x window

Chart #3

At 1,2 and 3, we are making LL and LH and LL
Then at 4 we have a HH
This is the price action clue that the trend may be changing along with the fact we have spread between K and D on the LT Stoch up that we should be looking for a HL and a MOF.
This happens at 5.

Now price goes up and makes a HH at 6 and then a LL at 7
This is the price action clue that the trend may be changing along with the fact we have spread between K and D on the LT Stoch down that we should be looking for a LH MOF.
Sure enough at 8 we get our LH and the MOF signal.

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Lets add the MACD and see how it can help us.

Chart #4

Notice here how the MACD histogram reversal gives you a place to look for the entry for the MOF.
A trader may also use the reversal candles for an entry.
Another way is the take out of the first bar in the direction of the trade.
BBs are also on that chart to show the entry if you were using BB touches.
Entries, stops and exits are something you need to determine yourself keeping in your comfort zone.

Note the line on the MACD lows matching the price lows at 3 and 5.
Price is making a HL and the MACD shows a LL giving us our HD for the long.

Note the line on the MACD highs mathcing the price highs at 6 and 8.
Price is making a LH and the MACD shows a HH giving us our HD for the short.

We now have 2 signals.
MOF and HD for the long.
MOF and HD for the short.

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Now lets add the Bline - all simple stochastics
5/3/3
9/3/3
35/10/1

Chart #5

There are many setups in the Bline that the MOF can go with.
My favorites are the first buy or sell signal with a rising or falling Bline or bounce off rising or falling Bline.

This chart shows the bounce off rising Bline to go with the MOF long and the first sell signal on a falling BLine to go with the MOF sell.

There are our 3 signals - one in each indicator window for the buy and one in each window for the sell.

I have put a green arrow on the bar for a buy at 5 and a red arrow on the bar for sell at 8 that you would be filled on if you were using for an entry the take out of the first bar in the direction of the trade.

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Now one of the most common questions I get asked is what is the difference between an MOF and a 2X Slingshot and BLine sling.

The 2x difference is the spread between the K and D on the LT stochastics.
Slingshots also tend to happen when LT Stoch is one of the zones.
The Bline will have a flat Bline and the ribbons will make the sling.

Here is a chart..

Chart #6

Note the 2X MOF has spread between K and D 2X LT Stoch.
For the 2X Slingshot, the LT is flat and has no spread. Slingshots normally occur with the LT Stoch in either the buy or sell zone.
That is the only difference and why they can be learned together if so desired.

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Now for an explanation of what we call the 50% MOF Sling in the room

Chart #7

1. Price makes a HL
2. Price tests the last swing H - exit on divergence in both the Stochastic and MACD
3. Price makes a LL at 3 and 2X has spread on LT SToch. Price action clue trend might be changing and to be looking for a LH MOF.
4. We get the LH but the LT Stoch have gone flat with very little spread between K and D. Same with the Bline - flat.

Although this can take place anywhere between the 30 and 70, we call it the 50% MOF Sling to help tell you what you are looking for on your chart.
It fits the MOF because it is the fist signal after LT Stoch turned.
It fits the Slingshot - because the LT Stochastics is flat.
By using this term, you know the MOF won't have the normal spread between K and D and the slingshot won't be in the usual location - buy zone or sell zone.

The setup also has HD in the MACD window and a sling in the Bline window making it a 3 signal trade.

Today we had two of them on the 532T chart. Both the buy and the sell 50% MOF Sling had HD in the MACD histogram with BLine ribbons in the appropriate zone.

Chart #8

One thing I would like to say here is if you already have a system that is working for you but you think this may have some merit, run the two side by side in a playback and just watching them. You get your own system by adding things that talk to you and improving what you already have.

Thanks for coming and I hope you all enjoyed the class.

These are the charts links with a black background for those that prefer it.

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http://dacharts.org/archives/Buffys_Classes/_Charts/cl040127BC_63.gif

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