It's the Context that Matters

Trading indicators is the road to inconsistency. I teach my students to look at what the market is doing, what "they" are doing and not to get married to the indicators. Whether you are using an algo to enter or not, the idea is the same.


Today's open in the DAX future (pre-stock market open) is a good example. The market opened down. It gapped down. Open was about 7190 at Support and more at 7166ish and then 7155ish.


Do you buy or sell the gap? Market today said to sell it. We saw support holding with lower highs, EMAs of course pointing down, 45CCI showing downtrend. A sale of a new low was the odds on trade. Selling 7186 and buying 7166. Twenty  points or 500 Euros. Then wait for what unfolds around the actual DAX index open with the stock market, S and R from Market Profile. Or take the rest of the day off.


The German stock market opened. The EMAs were still trending down. The 45CCI had flipped back into a downtrend after a pullback. Perfect. Sold at 7166. I bought last scale at support of 7150, a good round number loved by the DAX. Ching, ching and my day can be done.