Tuesday, 25 May 2010

More Gaps

I just love that Gap trade. But it wears many different contexts. Today's was different again with a huge gap to close a smaller one to the bottom of the single prints of the tail on the 21st.

The most important part of the picture today was the Fib number I love. If you don't know what I'm talking about, use the Google search on this blog for a post or two.

My vision was to trade the Gap which was a buy in this case. But I need a reason to do so otherwise my trade location could be intolerable and my risk uncalculable.

Today, I found the solution in the Fib number and the 45CCI. It gave me a low risk entry with a target to the top of the VA of the pre RTH session or the DVAH of the current session. Secondary target was the bottom of the single prints and the third was yesterday's close (which I didn't anticipate to use for this trade).

It unfolded as per the chart. I exited at the VAH, then the bottom of the single prints and the final piece with the 45CCI and volume divergence and low volume of the pre RTH session.

Trading is a multi-dimensional occupation. There is a continual challenge to understand what is happening so you can anticipate or deduce what the outcome of the current action should/could be. But remember, it doesn't matter how right your vision is, one or more large traders can come with the opposite view and change the outcome.

This is the type of stuff I want to teach in the training. As I said many times over, setups are everywhere. It is the putting together of the picture that is important and the ability to do it in real time in a timely manner that makes a trader. This thought process can be learned with the right approach and that is what I intend to share in the training.

1 comment:

  1. Hi EL.
    Wich swing did you use to set up the fib retracements? What do you see to chose one swing than another?