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| Chart 1, CEFT |
Alan Farley is a professional trader and mentor for over 16 years. He is author of the bestselling "master swing trading", columnist for RealMoney.com and editor of the newsletter "The Daily Swing Trade". Twisted logic can invent a very profitable trading strategies. For example, we learn to buy breakouts and sell up to breaks down, but some market players sometimes do the opposite.
They wait, when the movement bogged down, and then sell on a break up or buy at the break down. These players are illogical does not end there. They go on and buy, when an unsuccessful attempt to break through once again fails. Let's try to explore this way of thinking. Most of us are beaten track - we buy, because the forex market breaks through resistance, but kontrigroki know exactly how we react when our wonderful break up drops like a stone. Therefore, they suggest, where are our stop and come in short positions on the same price to earn money for our failure.
Now, let's talk further. Price breaks up - you sit omits. The price then drops to the point of breakthrough - you continue to wait and do nothing. But when the price bounces back above the price break, you buy. And you suck!
Modern markets are trying to knock each before they start definable trend. My friend Bo Yoder calls this effect "rinsing." Whether caused by manipulation or mechanics, but the price is like a magnet attracts the top and bottom to normal levels of support and resistance. This move clears the stop before the market starts to move above or below. Not quite nice when you get caught, but there is a great opportunity when you are away.
As the price action "to know" where the stop loss? The answer is quite convoluted. Retail traders are well versed in the basics of technical analysis. They open positions, using the general methods already dismantled fast money. As a result, the price goes through support and resistance are much more easily than in the past. But do not despair. Whenever the market comes up with a new way to take your money, it also gives you a new way to do it. Using modern graphics programs can more easily find the pitfalls and failed to take advantage of hidden trading opportunities. Let us consider two examples.
We had a situation to play on the break. Using the Fibonacci tool, we have constructed the intersection of two key rebounds. Notice how the tool identifies the exact price at each level. Using this tool, we predicted that the market will come back next time with a mark of 29 and will rise to its maximum (December 3). But the price did not go that way. Four days later, the market did gap down by purpose of entry, and made a mad dash to the 50-day moving average. Price made a dash at the beginning of this session, and turned to close back above $ 29. The next morning, the price did GEO above the target in and completed the formation of a significant reversal from one bar "Abandoned Baby". Then the market did rally to test the old high. Fortunately, the gap was down to keep traders on the movement out of the game. The most effective strategy for limiting trade entry after unusual Gaps. But already open positions were stops in the middle of the "rinse" because it looked like a safe level on the chart. Here we have an interesting class of trade - the safe prices are also the most dangerous. Is it illogical?
Let's look at another example - the graph OXP. We looked at the intra-day bars for the last 2 days of trading (in red circle) and predicted an immediate breakout to the upside. Wrong! The market has decided to go in the opposite direction on the same day. See how the graph clearly shows "rinse" which fills the GAP before the price finally jumps back to the line of resistance.
What happened next is even more interesting. The market spent the week preparing for a tight little ball. In fact, the last bar before the breakout show "NR7" - a term traders on the movement for the bar with the narrowest range of the last 7 bars. This quiet signal is often preceded by major price movement and control is a sign of the market, ready to move.
They wait, when the movement bogged down, and then sell on a break up or buy at the break down. These players are illogical does not end there. They go on and buy, when an unsuccessful attempt to break through once again fails. Let's try to explore this way of thinking. Most of us are beaten track - we buy, because the forex market breaks through resistance, but kontrigroki know exactly how we react when our wonderful break up drops like a stone. Therefore, they suggest, where are our stop and come in short positions on the same price to earn money for our failure.
Now, let's talk further. Price breaks up - you sit omits. The price then drops to the point of breakthrough - you continue to wait and do nothing. But when the price bounces back above the price break, you buy. And you suck!
Modern markets are trying to knock each before they start definable trend. My friend Bo Yoder calls this effect "rinsing." Whether caused by manipulation or mechanics, but the price is like a magnet attracts the top and bottom to normal levels of support and resistance. This move clears the stop before the market starts to move above or below. Not quite nice when you get caught, but there is a great opportunity when you are away.
As the price action "to know" where the stop loss? The answer is quite convoluted. Retail traders are well versed in the basics of technical analysis. They open positions, using the general methods already dismantled fast money. As a result, the price goes through support and resistance are much more easily than in the past. But do not despair. Whenever the market comes up with a new way to take your money, it also gives you a new way to do it. Using modern graphics programs can more easily find the pitfalls and failed to take advantage of hidden trading opportunities. Let us consider two examples.
We had a situation to play on the break. Using the Fibonacci tool, we have constructed the intersection of two key rebounds. Notice how the tool identifies the exact price at each level. Using this tool, we predicted that the market will come back next time with a mark of 29 and will rise to its maximum (December 3). But the price did not go that way. Four days later, the market did gap down by purpose of entry, and made a mad dash to the 50-day moving average. Price made a dash at the beginning of this session, and turned to close back above $ 29. The next morning, the price did GEO above the target in and completed the formation of a significant reversal from one bar "Abandoned Baby". Then the market did rally to test the old high. Fortunately, the gap was down to keep traders on the movement out of the game. The most effective strategy for limiting trade entry after unusual Gaps. But already open positions were stops in the middle of the "rinse" because it looked like a safe level on the chart. Here we have an interesting class of trade - the safe prices are also the most dangerous. Is it illogical?
Let's look at another example - the graph OXP. We looked at the intra-day bars for the last 2 days of trading (in red circle) and predicted an immediate breakout to the upside. Wrong! The market has decided to go in the opposite direction on the same day. See how the graph clearly shows "rinse" which fills the GAP before the price finally jumps back to the line of resistance.
What happened next is even more interesting. The market spent the week preparing for a tight little ball. In fact, the last bar before the breakout show "NR7" - a term traders on the movement for the bar with the narrowest range of the last 7 bars. This quiet signal is often preceded by major price movement and control is a sign of the market, ready to move.
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