A REASON TO TRADE: ENTRY/EXIT/COVER 5/21/13

TIME for an update to explain some of the "tools" used to consider a trade.  Basically, in simplest form there are three parts to a trade:

REASON

• First, all trades must have a reason to enter
•  Second, an expected exit (or cover) point for part or all
•  Third, a reason to get out NOW

 TOOLS (few terms)

LB     the long Break Out target or the point in trading where the bull has a bias greater than the short bias for trading

SB   Opposite of the LB.  This is the Short Break Out Target; bear bias > buy (bull) bias

50CB  Approximately (often a visual rather than the exact although there is a math thing) 50% level of a control bar.  A CB is a micro trend bar that by nature controls the price or gives clues to the next price move.  A break positive (+)  (higher for the long, lower for the short) continues the prior trend.  A failure or failed break out tends to reverse the prior trend.

TL  Trend line.  for the 50CB it is a 45 degree and often (for a quick read) drawn on the chart.

GAP   In this instance, gap refers to the distance between current Price Action (PA) and the TL.  Can be used with the 20EMA as well.  The gap is used to measure/judge the strength of the trend.



HOW IT LOOKS

  [16:12] <CM> more visual and the long (similar for short)  long at support, TL test, 50CB +  (green zones)   reason to exit all/part:  break of support:  50cb, perceived support levels, TL's (red zones)