You cant actually know until after its done it, since even though it may have ranged for the last 5mins, it could breakout into a trend as soon as you get in. But the stratergy works in with range and trending markets, since if the market is ranging, your sells on the right shoulder spike would be at or every near the top of the range, and your buys would be near the bottom. However if the market breaks out of the top of the range just after you have sold, you will only lose a little bit of money as your stop wil be 16ticks at max normally, and then you just wait untill the trend overdoes itself, forms the formation, and then sell from that and make the money you lost back + alot more as it falls...
Its ok mate, just hope it will help some people on here who are struggling to find an effective profitable style of trading.. And if you like abit of beef on your ladies thats upto you mate!
IF you want to make this strategy I suggest reading trader vic's book. Wall Street Master. Pattern is a 2B.
Read it before you buy it, few pages missing http://books.google.com/books?id=y9lHXmbEfWIC&printsec=frontcover&dq=Wall+Street+Master http://www.dacharts.com/2b.htm
Fading extremes is a time-honoured strategy, so I think you are on sound footing here. IMO the best way to do it is to put in lots of screen hours. I would add one other little tip. Sometimes the market will stop you out by a little, and then plunge. In this case it's usually an even better short and you should put on double size short at the market. The lowest risk trades are when a bunch of people just got stopped out and the market then turns around to go the other way. This is kinda similar to Trader Vic's "2b" pattern mentioned in a previous post, I recommend you get his books and read them too for more input. This strategy also works well on longer-term timeframes.
Ive found an incredibly great website age that give syou a list off all the chart formations, and even explains how best to trade them. So well worth a look for everyone, even those who already know most formations and how to trade them, ateast now you can put a name to them.. http://www.coveredcallswins.com/chartpatterns/BestBullish&BearishPatterns.html#rounding-tops The 1 that has gripped my interest most is the diamond top formation. As ive seen it quite alot of times before, but normally i passed it off as just a double top that could easily breakout. The main formation i have focused and specialised in trading are head n shoulders, but this diamond top formation is very similar, and about the same level of frequent and high profit, for only very little risk still. So im going to start trading off diamonds too..
The sophisticated methods for quantifying the exact entry and exit points in this strategy are staggering, lol. Good luck.
lol Are you 1 of the crowd who think that chart indicators such as mas, macds, bolinger bands... ect actually do anything at all to help you get a better entries and exits in your trading?? Cos if you do you have a huge amount of learning ahead of you... The mere fact that you have used the phrase ''quantifying the exact entry'' shows that you honestly shouldnt start trading with real money yet. lol Since in trading there is no such thing as ''getting exact perfect entry''. You can can get your trade in, a few minutes later if the market has risen alot into profit you can then look back and see 'ah yes my trade was in at the very lowest point that i could have got'. But it would be very very foolish to think that you could somehow work out in-advance at the time what the lowest point of the day was going to be and so get your trade in there! Im not sure if you have ever traded crude oil with virtual money even, but if you do you will see that you dont get big amount of time between the number 2 and 3 when the head n shoulders formation forms. Its usually between 6seconds to maybe 30seconds at maximum. So you have merely a few seconds in which to get your trade in, so you just focus on getting it as high as you can on spike 3 as possible. It really is as simple as that. If i could simplifiy it anymore i would, as in trading you try to simplify things, not over complicate them...
but Spanish how do you explain your words 7 days ago or so on another thread how you blew up and wanted to go back to become a firefighter and that all you had left is 3.5 k Spanish come on man, what the hell if wrong with you