The Draft Marks measure how deep the hull sits in the water. In trading, the LSS envelopes measure how deep price sits within its support and resistance zones. Drop the lead line into today's price action and it returns four measurements:

  • Buy Envelope: A support zone averaged from four levels
  • Sell Envelope: A resistance zone averaged from four levels
  • Trend Momentum Indicator (TMI): Close today minus Close 2 days ago — tells you if the cycle is intact
  • Overbought or Oversold: A 0-100 reading forecasting next-day bias
Concept first: The LSS system is a mechanical day-trading method that does not require interpretation during market hours. For the conceptual framework behind these calculations, see The Book Trader's Log. For Raschke's concept-based alternative, see The Lookout's Post.

LSS Calculator

Input Today's Session

Buy Number
—
Support zone
Sell Number
—
Resistance zone
Anticipated Range
—
Sell − Buy
TMI
—
Trend direction
OB/OS %
—
Neutral
Level 2 Entry
—
61.8% retracement

The Formulas

Buy Envelope (Support Zone)

ComponentFormula
1. Previous day's lowPrev Low
2. Trend reaction buy2 × ((H+L+C)/3) − H
3. Prev high − avg DPrev High − Avg D
4. Prev low − avg BUPrev Low − Avg BU

Buy Number = Average of the 4 components above

Sell Envelope (Resistance Zone)

ComponentFormula
1. Previous day's highPrev High
2. Trend reaction sell2 × ((H+L+C)/3) − L
3. Prev low + avg RPrev Low + Avg R
4. Prev high + avg BHPrev High + Avg BH

Sell Number = Average of the 4 components above

Anticipated Range = Sell Number − Buy Number

Trend Momentum Indicator (TMI)

TMI = Close today − Close 2 days ago

ReadingConditionAction
More positive than previous 2UPCycle intact
Between previous 2SIDEWAYSWatch for change
More negative than previous 2DOWNRephase cycle

Overbought or Oversold Indicator

((H − O) + (C − L)) / (2 × (H − L)) × 100 = %

ReadingAction
≥ 70%Overbought → sell next day
≤ 30%Oversold → buy next day
30-70%Neutral → wait for 1st hour range violation, then fade

Level 2 Entry — 61.8% Retracement

After the first hour, when intraday range is established:

Intraday Range × 0.618 + Intraday Low = Buy entry
Intraday High − (Intraday Range × 0.618) = Sell entry

Worked Example

Input: H=4500.00, L=4485.00, O=4495.00, C=4492.50
Prev: H=4498.00, L=4480.00, C=4490.00
Close 2 days ago: 4485.00
Averages: D=8.50, R=7.20, BU=1.80, BH=2.40

Calculations:

  • Trend reaction buy = 2 × ((4500+4485+4492.5)/3) − 4500 = 4485.00
  • Buy components: 4480.00, 4485.00, 4489.50, 4478.20 → Buy Number = 4483.18
  • Trend reaction sell = 2 × 4492.5 − 4485 = 4500.00
  • Sell components: 4498.00, 4500.00, 4487.20, 4500.40 → Sell Number = 4496.40
  • Anticipated Range = 13.22
  • TMI = +7.50 (UP)
  • OB/OS = 41.7% (Neutral)

Key LSS Rules

  • Profit Target: Double the anticipated range (not single)
  • Exit if missed: Market-on-close (MOC)
  • Win Rate: ~50%, but average profit >> average loss
  • Short Side: ~70% of all winners come from short selling
  • Shape Ratio: 3.89 (excellent; >2.0 considered good)

Related Guides