IMPROVING YOUR ODDS: Matching Your Trade with the Market

Your objective in trading is to learn how to make correct calls.  Making a correct call is worth far more than making a winning trade.

Making a correct call is key to your success as a trader.  Correct calls will improve your ability to stay out, get in, stay in.  I know some traders that will practice-after a failed trade- twenty straight correct entries  before going live again.  They simple want trades that have a higher probability to work in their favor, and they want to be right.  They practice what is expected to be

Correct calls can include:

• area to enter.  What price is likely to work for your trade.
• enter a long or enter a short
• standard entry or increased contract entry.
• take no action.  Poor entry in the PA, no setup, distractions, and so forth.
• with the trend or counter trend
• the trade has to be right, NOW.  You do not stay and hope.

TODAY

The market had four phases today and each had a "correct" setup.  That is not to say that other setups were not available.  It simple means these were the setups we were relying upon for trades.

PHASE 1:  The market was in a bearish channel prior to the US open.  The rth only approach would miss this information, thus the preference for global charts.  In a bearish channel, the preference is for shorts at/near the upper TL.  At the end of the channel was a failed breakout which led to a long position.


PHASE 2:    A rectangle pattern that represents sideways price action.  The expectation is that the breakout will follow the previous trend.  The short was hit on bar 18.  The EMA can act as a resistance as the trade goes negative and will give your trade time to work.  Your stop would be above the top TL.


PHASE 3 & 4:  The break of  #2  was also a BO of  #1.  This bear run (any run) is assumed to have two to three legs from the breakout.  Pullbacks 3 and 4 failed to reach the EMA resistance and would be short entries.  The first leg was for 4 points.  Leg 2 and 3 should approach this total for your target.


PHASE 5:   A bullish channel that is generally expected to retest the prior breakout point (BOP).  Some traders will wait to enter long if price exceeds that BOP, while others will attempt tight stop shorts at the same area.

Our approach is to long the lower TL, and watch for any market changes at that prior BOP.