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Linda
Bob Hunt wrote:
>For example, in just this morning's trading, a setup occurred that
>might have duped the unwary into initiating a long entry (attached 5
>min. bond chart). The early morning bounce off of the 122-28 swing
>pivot low looked very convincing . . . a U-Turn pattern with a strong
>upward thrust.
To give you another perspective of the same position, let me say that when
you know how to make an Inside Day Trade on the T-Bonds, it would not occur
to you to go long in such a situation - and you certainly would not need a
momentum or any other indicator to tell you (after the event!). You can
evaluate an indicator or moving average over as many hundreds of bars as
you like and on no occasion are you going to be told in advance of the
market telling you what it is doing, if you are day trading and have the
right tick, minute and other charts to refer to.
In the example given, you would not have got long, because the reversal bar
went up 5 ticks in 2 minutes and you would have been on the wrong side of
Yesterday's Low, on which you were looking to short. Furthermore, the
indicator was on its way up at the time - it was only 'correct' after the
event - as are all such indicators. Study the tick chart carefully and
you will see that the aggressive trader was short at the time, while the
more conservative trader was short after the stall, with a closer stop.
If a day trader waits for an indicator's signal to mature, the chances are
the opportunity has passed. But scanning the right charts, containing
positive market information, in the correct way, will lead to evaluating
the price action in a manner which has the best odds of making consistent
profits.
Reading the tape is a near to the future as you will get, relying on
indicators is reading history. Which is more likely to make money?
Hope this helps
Bill Eykyn
www.dbceuro.com/bille.htm
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