I mentioned last time that more volatility was likely … and that is happening with whipsaws being the rather unpleasant norm. During times like this we have to be patient – it’s not always going to be like this! Currently the markets are twitchy because every day there’s a new scary story emerging from the Eurozone, Middle East or even the US. “Scary” can be defined as anything that causes uncertainty, and it’s fair to say there’s a lot of that right now.
Think about it … if you were trading 5-minute bars, there wouldn’t be a trade every five minutes, would there? The same applies to hourly bars and also daily bars. Depending on what strategy you trade, there won’t necessarily be a trade for you every day – and there shouldn’t be either. What you need is a method that clearly defines the parameters for your trading and enables you to do so with clarity. So that when the opportunities present themselves you know exactly what to do.
We predominantly trade breakouts from channels and flag patterns. We do so when the OVI is correlating with the direction of the dominant trend and likely direction of the breakout. We know when we enter, we know when we take a first profit, and we know how to ride the trend if the market goes on a run. The trading plan is simple and yet it embraces common sense, trading nouse and human psychology all in neat package.
More soon
All the best
Guy Cohen