Quote from Maverick74:
Thanks for the background Captain. Let me give some further color on this. Obviously I don't follow all the steel related products. There is a steel ETF (SLX) but it's very illiquid. I've been following X for awhile as it's part of my sector basket. So by no means am I implying that of all the steel choices out there, this is the best one. However, having said that, I do follow this name closely and this is the first number line confirmation since January! That's a big deal in my world being that all my trades are number line based.
One thing I left out was the risk part, so let's fill that last piece in. I always use the monthly A downs as stops for my trades. For me, anything that is strong or should become strong should NOT confirm a monthly A down. So Tuesday of next week I will post the monthly A down level for X and rest assured, if it confirms, I'm out. It's as simple as that. I have a lot of trades on now and this is only one of them. So while I'm making a big deal about it for the purpose of this thread, it represents a small part of my book.
I do however like to illustrate these trades because I have found, in my experience, that when you get a number line confirmation on something that has NOT confirmed in a very long time, it provides the "opportunity" for a big move. Let me repeat this part. I'm looking for an "opportunity". I have no way of knowing if this or any trade will play out. But number line confirmations, especially rare ones, often lead to massive outsized moves where one can get in "early". I pointed this out awhile back on USD/JPY when that still looked like crap. I got a confirm way back in the low to mid 80's. Keep in mind, that yen pair had been dead for years with absolutely NO volatility. Who am I to make a crazy prediction on the Yen. But out of no where the thing confirms. So I broadcasted that on this very thread. And I said the same thing, I know this sounds crazy, but this Yen might actually break out to the upside. I even through a crazy crazy target out there that it might actually go to par. Well, it did and then some. I think it got a tad shy of 104. That is a MONSTER move for that pair.
As traders all we can do is two things. Look for opportunity and manage the risk if we try to capitalize on that opportunity. That's it. Everything else is just conversation. While the Captain provided a nice fundamental backdrop, all my trades are quantitative based, not fundamental. I'm not trying to make a statement about China or an improving economy. I update my spreadsheets every day and take all the trades it generates and GET OUT every time a risk level gets violated, no questions. I'll put my discipline up against anyone in the world. That's always been my strength. That and my propensity to out work everyone around me.
