An Intraday Version of the Simon System

In a recent post, Quill very carefully explained the differences between Simon I, Simon II, Simon III, etc. But I can’t keep track of them or make effective use of them. So I did what all of us have to do. I wrote my own version. But markets have been going crazy the past week, and the VIX, as a measure of that volatility, is up hugely. That volatility means that the moves worth tracking and trading are happening intraday, rather then inter-day, not that the latter isn’t connected to the former. But in volatile times, by the time an opportunity shows up on an inter-day chart, it’s too late to make a low-risk entry.

Here’s an example of that. Here’s SCWH on a 1-month chart with daily bars. Per Simon’s rules, yesterday at the earliest --but realistically, probably today-- would have been the earliest a rules-governed ‘buy’ could have been executed.

However, the time to have been buying SCHW (or any of the other banksters) was a couple days ago, as they were coming off their lows. So here’s a 3-day chart based on 30-minute bars that would have put you into SCHW at no worse than 52, and possibly as low as 50, depending on your rule set.

OTOH, it’s also always good to have an idea of the larger context. For that, something like a 6-month chart scaled in percentages and that includes a comparsion index is useful.



That 3-day intraday system works well with some stocks, but not with others for which inter-day charts based on daily bars do a far better job of keeping you out of situations better avoided and getting you into the ones you might profit from.

1 Like