I think this is what Jack is trying to say: A= lull before the storm = congestion, penants, NR7, etc B= breakout C= retracement/reverse in trend Volume confirms a breakout increasing = continuing trend steady = no direction, drift decreasing = impending change in trend Look for a bar with extremely low volume - that is the turning point Reverse your trade at that point. Note - you can't trade these concepts on a tick chart because there is no volume data. pretzel
I'd never expect to get so many replies on my first post, actually I thought this was just a newbie question...Happy to note that there is so much interest also by skilled traders on this topic. Thanks to everybody. I guess my problem with trading retracements is just a matter of mental attitude, since I always treat retracements as they all were inversions, but in fact they're not. I think I'll do a little paper trading in these days to test how I can manage pullbacks. I'm afraid I still have to work on it a lot, Just hope I don't run out of bucks first!! Bye Pawpaw
The retracement works to your benefit if the breakout is genuine in that it gives buyers a second chance to enter a trade they thought they'd missed. Of course, there have to be buyers and they have to feel as though they're missing something. If these conditions don't exist, you're looking at a failed breakout.
Well, we appreciate that Jack. You mean it takes Jack Hershey 20 trades just to make $900,000. I figured for a trader of your caliber it would only take about 5 trades...hehe Just kidding, and thanks for your posts.
I think all kind of secondary indicators, like volume and market breadth, aren't indicative of the future direction of the market. IE, th last rally took place with lousy internals, but so what? My advice is to look at what you trade and that's price action.