One for the European Traders...

Hi Everybody,

A nice TS4 buy (using IQFeed data) this morning on the 3min FTSE. Notice how the DP target nailed the high perfectly. Standard Traders among you would have swapped to the ATRStop as the STF strength band was exceeded. This gave a nice +3.3R Profit (ignoring slippage and commission).

Notice how the loss earlier was kept small. -1R is a lot less than the +3.3R made on the Profit, small losses and large Profits, that is the key to successful trading.......

Thanks, Steve

3min YM

OK, let’s now look at the 3min Chart.

The first trade of the day was not filled because the YM rallied and exceeded the high “before” taking out the buy order, so no trade. Then there was a legitimate buy that resulted in a -1R loss. Yes losses can and do happen, but as we all know by now, the trick is keeping them small, which is what we did here.

Then the question comes as a DP sell arrived later in the day. Yes this was in line with the 15min DP so was a valid one to take. But the difficulty came as a TS4 buy appeared a little later. Should you ignore, or stop and reverse or what ?

This was a difficult decision, because, yes, the 15min was at DP resistance, but that was only minor. So the best course of action would have been for the standard traders among you to just protect the profit as the TS4 buy came in. But the more advanced traders among you could have stopped and reversed for another +2R on the way back up again.

But before you all email in, this was not an easy call as the DP high was only minor resistance on the 15min chart.....And that is all that unfolded – a minor decline from that high.

Thanks, Steve

15min YM

Hi Everybody,

OK, as usual, let’s set the “larger degree trend” using the 15min Chart, today on the YM.

As you can see, we had a TS3 buy early in the day, so this set the larger degree trend to up. But the question comes later in the day when the YM reaches the DP (from the minor wave b high). As I teach in the Trading Course, a “minor” high can be made there, but it is usually only a minor high. So this does raise a question on the 3min chart that we will see in the next post....

Thanks, Steve