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Technicians pay little or no attention to the rantings on CNBC. Trading
is not about whether one chooses to stand in right front of a wound
spring waiting to see which way it will unwind, it is about stacking the
odds in one's favor and trading the market when the risk/reward and risk
size suits the trader's methods. Bonds and stocks are extremely tightly
wound in a 25% retracement range and they are quite likely to bust it
out of the range violently. Through Thursday morning, the price pattern
odds and my breadth models strongly favored a SP breakout to the upside
with little or no risk below the PL of the bull flag. This strongly
weighed the r/r in favor of the long side, particularly with Wednesday's
entry near the bottom of the range. Lack of follow-through on Thursday
changed the odds of breakout direction to neutral which would have
required expanding the stop to hold a position trade thus significantly
changing the r/r in the SP where fast moves and poor fills can
exacerbate the effects of a move. Further, one is looking at a news
release which has the potential to violently move the market out of the
range. In my experience, it is the trades which fail to move out as
expected which grind out patience and losses.
When a potential position trade sets up, it should look good on the
intraday allowing good entry. It should then move out on the intraday
eventually resulting in confirmation on the daily. Since I enter trades
based on price/pattern which indicates a significant move is imminent,
failure to achieve objectives indicates increased odds the trade will
fail. A good trader can usually (not always) find a way to (re)enter the
market using a variety of setups and time frames so scratching a trade
and waiting for another setup is no big deal.
I don't happen to think scratching a trade when the odds change is
chicken s---, however you are entitled to your opinion.
Earl
----- Original Message -----
From: "Phil Lane" <patterntrader@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, June 09, 2000 8:11 AM
Subject: [RT] Re: Friday's Direction - follow up
> ----- Original Message -----
> From: Steve Walker <Steve@xxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Friday, June 09, 2000 5:46 AM
> Subject: [RT] Re: Friday's Direction - follow up
>
> > And you never step in front of a major news item!
> >
>
> I beg to differ!
> Actually I think it's a poor procedure to agonize over every economic
> report, or fed meeting, earnings report, guru prognostication, etc
etc.,
> although you would never realize it from watching cnbc. You should
either
> trust in your technical signals or you shouldn't play. For a position
trader
> it's a chicken-s..t move to try and step around the news - You'll miss
the
> sweet part of the trade!
>
> If the market is acting bullish (that's another story) the news will
usually
> comply.... and the other way around. It may sound strange but the
markets
> predict the news!
>
> just one man's opinion,
> Phil
>
>
>
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