Posts by Rod David

Lower and lower lows suggest as much, the timing is suspicious.

Having trended up into yesterday”s close, gapping down under yesterday afternoon”s low could have triggered my “session-long decline” setup.

In fact, the open did gap down to yesterday”s last relative low of 2108.75. And the opening 15 minutes of volatility did extend under it. But it wasn”t optimal, since the first 10 minutes ranged sideways.

Only in retrospect, since the late extension down triggered bias-down, can we consider the session-long decline may be operative. 

During the setup, each timing window”s low tends probe under the prior timing window”s low, with one exception. And that exception tends to be the noon hour. Today”s noon hour did probe under the prior timing window”s low. So, again, the setup is not optimal.

Finally, the noon hour touched the 2095.50 bias-down signal. Despite approaching it aggressively, its reaction up was also aggressive. And pretty productive, already touching 2104.25. That was this morning”s bias-down target.

This afternoon”s bias environment probably won”t probe under the noon hour”s 2095.50 low. The next timing window need only probe under the bias environment”s low — currently ~2101.00 to maintain the setup. And the last 60-90 minutes would be vulnerable to trending sharply in either direction.

We do a lot to identify the market”s near-term objective (direction and target). That doesn”t mean the market will trend there uninterrupted, assuming that it”s going to get there. Even the best entry strategy may be stopped out — profitably, or not — prior to the trend ending. So, strategies to trade around a move are equally important as the original signal to continue exploiting the trend as it develops.

LATE-ENTRY / RE-ENTRY / ADDING

The initial buy or sell signal is only one possible entry trigger. A test of the reaction limit can also be used as an entry parameter.

When the 3-minute extreme for probing the reaction limit is identified, the risk can be calculated as a price beyond that 3-minute extreme. So long as that 3-minute extreme isn”t exceeded, any outstanding target can remain in-play.

This information can be useful to considering a new position”s Risk-to-Reward ratio.

First, measure the current price against the price that would violate the reaction limit”s 3-minute extreme. Next, measure the distance to the potential target. These two measurements are the Risk and Reward, respectively.

If that Risk is less than the potential Reward, and meets any personal trading plan objectives, then it can be considered for entry.

If not yet exposed to the original signal, or already exited, it would be an opportunity to enter or re-enter. If already exposed, this would be an opportunity to add.