The natural cyclical nature of trading.....

Hi Everybody,

It was another quiet day on the US e-minis yesterday, but then this was to be expected. As I outlined earlier in the week, because we have had a very good week last week, we should now expect some harder days and some quieter days. This is just the natural cyclical nature of trading, where the good times are followed by harder and quieter times before the good and profitable times come round again. Your job as a trader during these harder times is to preserve your trading capital so you are ready to take advantage when the good times come round again.

Too many amateur traders get frustrated during these quieter times and as a result start making silly trades, which then frustrates them even more with unnecessary losses, so they then miss the good trades when the come round. By knowing how markets really works, and understanding the natural cyclical nature of trading, you can be ready for these quieter times, and as such know that there will be less trades and also a few small losses. This prepares you to not get frustrated, so you are then ready for the profitable trades again .....

Thanks

Steve

The Answer............

As you can see from the 15min TF chart to the right, the 15min Chart had just made a 5-wave rally to not only end right at the Typical Wave 5 WPT, but this was also at good DP resistance as well. As such, the recent uptrend was probably ending and a 15min high was now in the process of unfolding....

So if we see a high coming in on the 15min Chart, what direction should we be looking for on the shorter 3 and 5min charts for our actual trades ? Exactly, down, or sells.

Apart from the Advanced Trader (who can use more advanced stop loss strategies), most traders should now be looking for sells, so what do you think the answer should be on our question in the post below on the TS2 buy setup ? Exactly, as this was “against” the new down trend, this was probably a trade that was best avoided (especially by the newer and less experienced traders).

So thank you very much to Tom for this question, it a very good one that we can all learn form.

Thanks, Steve

A question on a Buy setup on the Russell

Hi Everybody,

I would like to start today with a question that I received yesterday, it was whether this TS2 buy on the 3min Russell was a good setup to consider. Please see the chart to the right, also click on the chart to enlarge....

So what is the first question we should all ask ourselves ?

Exactly – what is the larger degree trend........ so let’s take a look at the 15min Chart in the next post.

Thanks, Steve

After ..............

Here is the result, a nice +5R Profit as the DAX rallied nicely to reach the opposing DP target where a potential +5R Profit was available

Again, this is for the Advanced Traders among you.

Thanks

Steve

Before..............

Hi Everybody,

For the Advanced Traders among you.

Here is a potential setup on the 5min Dax, where we have a VSA, high volume spike, bar that has immediately been followed by a blue (buy) reversal bar at DP support. As such, this is a potential low coming here.

The profit target is the “opposing DP” where a potential +5R is available

So let’s see how this unfolds............

Steve

Daily S&P reaches initial target

Hi Everybody,

Well, after 2 months, the S&P has rallied nicely, and has now reached its initial upside target form the Mar 6 low (which came in right at the DP support zone).

So does this mean that we are now going to make a high, and we should be looking for short trades ? Well, not necessarily, all it means is that we have reached the initial target for the rally from the Mar 6 low.

Thanks, Steve

A hard day on Monday

Hi Everybody,

After a few very good days, yesterday was a lot harder, but then this is just the natural cyclical nature of trading – after a few good days, we were overdue for a harder day with less trades.

Having said that, just before close we did get a TS4 but setup that did make the first profit target for +2.4R Profit (ignoring slippage and commission).

But overall, it was a hard day yesterday on the US minis

Thanks, Steve