August 31, 2011

Buying Pullbacks & Selling Retracements are easy if you have these rules

Disclaimer
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SchoolOfTrade.com and United Business Servicing, Inc. are not registered investment or trading advisers. The services and content provided by SchoolOfTrade.com and United Business Servicing, Inc. are for educational purposes only, and should not be considered investment advice in any way. U.S. Government Required Disclaimer – Commodity Futures Trading Commission. Futures and Options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 – These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or-over-compensated for the impact, if any, of certain market factors, such as liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown. Testimonials may not be representative of the experience of other clients. Testimonials are not a guarantee of future performance or success. No compensation is ever paid in exchange for any testimonials. Testimonials have not been independently verified.
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Buying Pullbacks & Selling Retracements.

Our Wave Pattern is nothing more than buying pullbacks and selling retracements.
Remember, there are many ways to take the WRONG pullback, and we use very specific entry rules to know which ones to take, and which ones to avoid.
When taken correctly, the wave pattern uses 3 levels of support to protect your long trade, and/or 3 levels of resistance to protect your short trade.
When you see a sloppy and high-speed retracement/pullback it is the sign of a failure.
Always watching momentum, looking for clues at the time when you are supposed to be entering the trade.
Don’t take the retracement/pullback with retracement more than the 61.8, that is screaming at us for a failure.
Where do we take these pullbacks and retracements?
These patterns are trend-continuation which means we are trading with a current short term trend.
If there is NO TREND there is no way.
We do not want to sell into the lows (support) or buy into the highs (resistance)
Remember this…buy at support…sell at resistance.
Avoid these patterns in the middle of ranges, and look to take these patterns at the extremes (highs and the lows of the trading ranges)
Basic trade management on the Wave is to put your stop at the recent swing high/low and your target at the previous swing high/low.
Make sure you pay close attention to your Risk-Reward Ratio.
Wave pattern is the most efficient way of trading:
–        Buying at support & Selling at Resistance
–        Wave long buys with price falling (more liquidity)
–        Multiple levels of support to protect your long trade, and resistance to protect your short trade
–        You are also trading with the short term trend
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Dynamic Support & Resistance:
–        Trigger lines are the most common
–        We use DYNAMIC support and resistance for entries, stops, and targets
–        This means they are always changing
–        Dynamic = always changing.
–        Keep a close eye on the changing support/resistance levels when you are trailing your stop, placing your targets, or looking for entries.
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–        Low Volume
–        Fear Globally
Crude Oil is a positive Dollar Correlation because of FEAR of lack of demand.
Dollar drops, so does demand on crude, and crude drops.
Gold has a TON of fear which means people are taking profit filled with fear and greed at the highs, even as the dollar keeps falling.
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Improve your tape reading skills with this video on the blog.
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What is overbought or oversold momentum so accurate?
–        Because we use it at the RIGHT LOCATIONS.
–        When you look for the buy, you want oversold
–        When you look for the sell you want overbought
–        ASSUME:  you are buying at support and selling at resistance.
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–        Very strong level that MAJOR money managers use as their key support and resistance
–        It makes an excellent profit target (price magnet)
–        But you do NOT want to trade around it (sloppy)
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    schooloftrade

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