Improve your Forex Trading with the Camarilla Equation

The Camarilla Formula:
History, the Equation & Stuff That the Intermediate Trader Should Know

Improve your day trading with the Camarilla Equation

For the intermediate trader who wants to be up a notch in the day trading industry, familiarity with the Camarilla Formula may be of help. Those who are no longer new to it have regarded it as the magic formula for successful day trades. The idea is to focus on highs, lows, and closing prices. With the promise of low risks and high returns, it should not come as a surprise if an increasing number of traders intend to implement it. If you wish to join the bandwagon and know more about the equation, staying tuned to the lessons will do the trick.

The Camarilla Equation helps day traders better predict support and resistance levels,
using past market volatility. (Image by Pixabay.com)

History of the Camarilla

In 1989, a bond trader named, Nick Stott, observed different financial markets. As the results of his observations unveil, conditions tend to revert to the mean. Regardless of economic factors, it is not impossible for figures to resort back to yesterday’s.

Furthermore, it goes to show that support and resistance levels can be predicted with the use of past volatility. Furthermore, it reveals that once a wide spread between highs and lows during the previous day has been established, they are likely to retreat and reverse toward the closing price of the same day. The root of the discovery, you ask? He called it the Camarilla Formula.

The Camarilla Equation

High 1 = Closing Price + [(1.1 / 12) * (High – Low)]

High 2 = Closing Price + [(1.1 / 6) * (High – Low)]

High 3 = Closing Price + [(1.1 / 4) * (High – Low)]

High 4 = Closing Price + [(1.1 / 2) * (High – Low)]

Low 1 = Closing Price – [(1.1 / 12) * (High – Low)]

Low 2 = Closing Price – [(1.1 / 6) * (High – Low)]

Low 3 = Closing Price – [(1.1 / 4) * (High – Low)]

Low 4 = Closing Price – [(1.1 / 2) * (High – Low)]

As follows, the Camarilla Formula is not for a newbie since it can be rather complex equation; an inexperienced fellow may just end up with a loss. With the method, the objective is to produce about 8 levels based on the previous day’s highs and lows, as well as closing prices. These levels are, then, divided into groups where one is regarded as the group with breakout levels that can be capitalized.

In a nutshell, the SureFireThing Camarilla Equation is a trading system that will help you improve your market trading, no matter which way the market is going.