Walking the Line & Thinking Differently
I have learned many things while conducting Live Market Exercise for our clients and the most important is expect simplicity. Today we focused on GBPUSD for the same reason I focus on most markets, because it was aligned on its higher time frame trends. From there it’s just a matter of waiting for a price dip to support and staying patient. Lately the markets have had a tendency of walking the line – holding a support level and then walking along it — and the play is as simple as buying the line the 2nd time down, after it holds the first time. The line can be a pivot, a directional line, or a retracement, or a confluence of all. The key is making sure those higher time frame trends are aligned. After providing the dip to support at 8 AM EDT, and giving us a nice little rally to the even figure before the Bernanke speech, price kept to that simple pattern and dipped to the same support level once again– our 4-hour directional line — before bounding all the way up to Pivot R1 at 163-28.
One of the most important aspects of trading which I see that needs to be acquired by market students is the ability to think differently. For me the market provides the environment, and highlights the set-up, while the method qualifies the signal. I’m just here to follow orders and execute the plan. From my perspective there is no personal mental input, no thinking needed. For many people that would be difficult given they believe they should make all the trading decisions, and the method is just a tool, when in fact it needs to be the opposite. It’s also difficult for people to see things from the proper trading perspective given the amount of time they spent listening to their own thoughts, and acting on their own emotions. Regardless of what is going on between my ears, I know my only job is to follow the market and execute the orders the method give me.
Jay Norris is the host of Live Market Exercise, a complimentary service for clients of Clovernest Financial Group, and the author of Mastering The Currency Market, McGraw-Hill, 2009. Jay’s second book, Mastering Trade Selection and Management, will be in book stores in May.
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor!