The Battle Plan and the Market

Discussion in 'Financial Futures' started by Rae, Sep 15, 2009.

  1. Rae


    In an article I wrote yesterday, I wrote about the importance of thinking ahead and trying to anticipate where the market might be or how it might look technically at some point in the future. To reiterate why I think this is important is because as a trader, it is my technical opinion that you want to be in front of an idea not behind it. Think about for a moment.

    If you are trading and watching the market move around and you see something that technically might be setting up the way you would like, what do you do? You might start to zero in on the market by assessing different time frames or looking at your trade triggers, but if you’re an intra-day trader a lot of times by the time you start to focus in the set-up it is gone. So, then what do you do? Do you chase the move, or maybe you get a little frustrated and begin to get a little tilted. What happens to your trading then?

    Here is an excerpt of a Currency Futures Trading report I wrote for Tuesday September 15, 2009.

    “If a currency trader wants to play the short-side of the Canadian Dollar then the 5-day moving average (.9259) might be a good jumping off point and with any significant pop through this average could be utilized as a technical cue to step out of the short. I would like to point that between the two areas of concentrated volume (.9232 & .9280) there might not be that much resistance to an upward move, therefore it's possible that the Canadian Dollar spikes through the 5-day moving average to the bottom of the top level of concentrated volume (.9280). Therefore, in this technical structure a trader could place one trade close to the 5-day moving average with a tight just above the average and if the market spiked a currency trader could reset closer to .9280.” {see chart below)


    You can see that the first part of this report illustrates how a currency trader might play the potential movement of the Canadian Dollar, or maybe what a currency trader might look for in the technical structure of the Canadian Dollar. Now compare that with the actual action today (review chart above). You can see that the first potential scenario and the second potential scenario look an awful lot like the action we seen in the Canadian Dollar today.

    So, what does this mean? First I would like to clarify that “Past Performance is not Indicative of Future Results and by no means am I implying that by implementing a trading ideas will result in profits or limited losses. My point is to illustrate to you, that by thinking ahead on what the market may look like at some point in the future will assist you in being in front of the action rather then behind it.