Monday, 25 July 2011

Like Poker, The Turn Is Key

I love playing cards. I can't remember not playing cards. At university, we often headed to the pub to play Manilla, the Oz version of Hold 'Em. There are still guys walking around who owe me money from those days. I loved it. I play Gin, and more importantly, Bridge.

But let's get back to Hold 'Em. The turn card in Hold 'Em is a very important stage of the game. This is where I make or lose money. The same is the case in trading. When I identify the turn - the change of trend of my chart - I can get the biggest bang for my risk buck. That first trade allows me to load up and then scale out as the trade develops. A later entry is higher risk and lower profit potential as the end of the trend is closer.

How to identify the turn? Convergence of the EMAs is the first clue and then watch the order flow reverse. You can mechanise things by adding the correct ingredients to an indicator.

The chart below shows the critical turn areas that traders can identify. 

1 comment:

  1. Any possibility of sharing the new orderflow indicator that flo is using?