Rollin’ w/ the Flow
I will tell you something for nothing about trading: you need to understand the importance of going with the flow. Some experienced traders like to observe the markets like a hunter, and wait for a familiar set-up with a favorable risk reward. When the set-up produces a trigger they take the trade with the knowledge that they likely will be right more than they are wrong, and they usually will make more per trade than they lose. I can see the sense of this style of trade, and I imagine it is going with a certain flow, but is just doesn’t seem to suit me.
A style of trade that I do appreciate and one which can be described as rolling w/ the flow is first identifying a market which is trending down on the higher time frames and one market which is trending up on the higher time frames. And have an understanding that most market give signals at the same time. While they generally give signals at the same time, and often even in the same direction, one will be a trend signal , and another a counter-trend signal.
EURUSD and EURJPY provided great examples of this. Following the Non-farm payroll report today EURUSD found itself above the Central Pivot and higher on it’s 240 minute and 60- minute charts, while EURJPY was inthe opposite position below the Central Pivot w/ it’s 240 and 60 min trends lower. Despite being on opposite sides of the Pivot Point fence, they gave singals at the same time in the same direction. (The orange line on the charts is the previous high while the light blue line is the previous low). As a trader we would focus on every signal, and opt to take only the trenders.
I imagine this type of trading appeals to me because my first trading mentor Bill Williams believed that you needed to be in the market most of the time in order to catch the big moves. This same belief is shared by Al Gaskill our Head Trader.
Jay Norris
www.trading-u.com
DISCLAIMER: Futures, options and Forex (off-exchange foreign currency futures and options, or “FX”) trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, options and Forex may fluctuate, and, as a result, clients may lose more than their original investment.