Here's a look at a signal failure. ADRX gapped up and expanded immediately after the open. The first three bars all closed up. So far so good. And there was contraction after this initial impulse expansion. The dummy spot was the NR7, inside bar at 11:00 am. But it didn't work, obviously. The general tone of the market by then had turned negative again and ADRX followed suit. What was wrong with the scenario? I can point to two things. One, while the third bar had a positive close, it left a long upper tail. In effect, it was an inverse hammer. This meant that the buyers were beaten back by the selling pressure. Also note that on a daily chart, this is the resistance level from mid August. The second thing is that after the impulse move up, price rested (or floundered) quite a bit. From the fourth bar, which was the first down bar after the open (on a 15 min chart), price spent the next hour going nowhere. This sort of indecision is further proof that there wasn't really a lot of buying interest to propel price past the morning high set by the third candle's high. Those are my thoughts but I'd appreciate hearing others' opinions as well.
Sorry, I guess I should have phrased that differently. Is anyone still around who trades the "trading for dummies" framework as espoused by Chairman Maoxian? I believe it has merit and has made some paper money for me in my IB paper trading account...
Hi Steve, Yes, I still trade them and yes, it can make you money, also in real life. You can also lose money. the basic setup works, but you need experience to find the best opportunities. The best way is to trade them a lot, with size so small it seems riciculous and keep good records. Once you get the hang of it, scale up. Keep stats on your hitrate and lower risk when 'out of sync'. Good luck...