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Trading Perfect Signals. The Art Of Contrarian Trading
Whilst you are trading the breakout to new highs, or waiting for Perfect Signals from the market before getting into a trade, maybe taking a look at the same thing, but from a different angle may help. Why not look to trade the pull-back instead of the new breakout? There is room for both, but the Bounce tends to be an easier path to walk. Trading the bounce from a recent reversal works more times than trading the break-outs to new highs, and tends to allow for more trades for you to [I]already[/I] be in as the new break-out, or Perfect Signal, occurs; why try to plow a new field when we can follow the lines that we just saw set. Better maybe to look for a move back to a main Support area, wait for the market to show that the price has held, look for confirmation from other cross pairs that are moving in the same direction as your proposed trade, and get in before the Perfect Signal has formed. [IMG]http://www.thelfb.com/wp-content/uploads/03-28-08/LFB-Contrarian_Gap_Play.jpg[/IMG] This leads on to looking for Perfect Signals. How many trades go by that as soon as the Perfect Signal comes, (everything aligns, trade gets taken), they suddenly reverse, the moment that you get in? By waiting for too much confirmation, or not having a plan in place that allows for disciplined Contrarian Trading, a Perfect Signal to enter will most times fail; it has only become Perfect by having already moved from a Contrarian bounce off a major price point. Contrarian Trading; taking bounces off Trend-lines, Pivot Point lines, SMA’s, whatever they are that can be justified as a major Price Point, is harder to do, and has more fear, than waiting for the Perfect Signal. However, if it is properly planned and taught is the easiest way to trade because, it is following the overall trend. The 4 Hour and 60 Minute charts are key, and Pivot Point lines help dramatically. The Perfect Signal then becomes to a Contrarian Trader their signal to exit, along with the other Pro traders. Hence the reversal just after the Jumper-Inners have jumped in. Please do not read this and think that it is trading against the Trend. It is Trading with the overall Trend, but ONLY after a pull-back to a pre-determined price point. [B]Yours sincerely Jack TheLFB Team[/B]
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- Apr 14, 2008 2:19pm Apr 14, 2008 2:19pm
- Trout
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