Wednesday 19 November 2014

See How Context Rules

Today's pic is a great example of the importance of context.

Looking at the Market Profile, one can see that the Profile is inside the previous day's VA and has not finished doing it's thing there. On the other hand, indicators show trend is UP. Signals switch between short and long.

When the market opened, I took the first short trade as that was the only information I had. I soon covered the short at a tick profit as I saw that the market was not going to go far due to the context.


Once thie context resolves I can take a trade. Trading off individual or groupd of indicators gives a much lower win rate and profitability than can be achieved by looking at the context first and then the order flow within that context. Being clear whether the trade is with or counter the trend is also criticsl.

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