Trade Aptitude
Results of Tuesday’s Best S&P Turning Points: The short @ 4146.00 was cancelled due to the volatility from Powell’s comments @ 12:40 ET. As mentioned in Monday’s blog, “…pass on reversals in strong trending days…”.
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Buy 4114.25 stop 4009.75. Short 4146.00 stop 4206.50 stop 4212.25.
The World Sentiment Index: (+100/-100) DIPS from +21 to zero in a world of mixed sentiment and low volatility. Historically it’s a coin toss which way price closes.
Catalysts: International Trade @ 8:30. EIA Petroleum Status Report @ 10:30. FOMC members speaking @ 9:15, 9:30, 10:00, 12:30 & 13:45. Takeaway from Powell yesterday: “Inflation will take ‘significant time’ to come down.”
Quick Tip: Power in Confluence
You have a trade plan with specific rules of entry and exit that produce a positive expectation (if not, get one or quit trading). If EVERY trader used the same plan and followed it precisely there would be no one to trade against.
You WANT and NEED traders to do something different than you. This is a good thing. Now if you want to step up your performance you’ll learn OTHER popular trading strategies. Not necessarily to trade them, but to consider what OTHERS may be doing at the same time you’re entering or exiting.
Here's a simple example: Bollinger Bands are like the “Swiss Army Knife” of trading. They are simply volatility bands around a 20-period moving average. You can see the trend on the moving average and the volatility of price on the bands. This is plenty of information from one indicator.
You may not use it because it is a lagging indicator, or you haven’t been taught how to make it work. Regardless, there are traders who use it.
Put it on your charts. Why? Because if your strategy is getting a signal to enter or exit you might find some confluence with Bollinger Band strategies.
One of many: If you’re short in the trade and wondering about a good profit target, approaching that moving average from above, where others might be buying, would be a fine exit.
I’m not suggesting you clutter up your charts with every indicator or trendline or fib, etc. Investigate many indicators, pick your favorite (that doesn’t have anything to do with your strategy) and look how others trade these to consider their potential effect on your plan.
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Trade Fearlessly,
Mike Siewruk
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