Below is a setup I have used for years when trying to find a good buy point (we'll discuss exits in a later post). This setup frequently presents itself and helps to navigate the Market on Close order flow and also plays off a commonly used tactic of prop shops to pump and dump into the close of uptrending days.
The signals lines are an 8 period high and an 8 period low based on 3 minute bars. Virtually any trading platform has the ability to create this simple template. We then simply watch price action on this channel for the last 15 minutes of the day, Our alert comes when price falls below the lower channel line and the buy signal triggers when price moves up into the channel.
There's not a big window of opportunity here, especially on high volume days when things are moving quickly but this simple little tool can frequently save $ in lieu of a market on close order.
In the example of XIV shown below the signal allowed a buy at $34.64 instead of the MOC price of 34.97...a savings of .33 or almost 1%. Every penny counts in this game and a little attention to time of day and the 3 minute 8/8 channel may put a few more pennies in your pocket than the other guy's.
