Trends exist in
every trading vehicle, and on
every time frame. Whether the current trend is (or will be) of short, intermediate or long duration I cannot say in advance. However, one doesn't need to know how long the current trend plans to remain intact. One
only needs to know when the current trend
changes in order to bank profits.
First, lets look at a trend.
Wednesday's ES Chart trended quite nicely throughout the entire day. More importantly both the orange and blue (thick) trendlines were drawn in a whole day in advance. Ridiculous? Far from it. Scroll back a few posts from the above linked chart to locate
Thursday's ES Chart and match up the trendlines for Wednesday. No magic beans, no voodoo, no 'hindsight' analysis. Clearly the trend continued from Tuesday on into Wednesday. Such an analysis remains unmistakably clear. Once a trader has determined the dominant trend direction, one simply need to wait for the signals in order to anticipate the trend change.
The FTT (Failure to Traverse) marks the turning point of a trend, and more importantly, a change in trend direction. Whether the change in direction continues for a short, intermediate or long term doesn't matter. Once one locates the FTT, one simply enters and monitors for the sequences of events to unfold in an effort to determine the next action (hold, reverse or exit).
How do you know which actions to take? The market tells you in advance.
What follows an FTT repeats time and time again independent of trading vehicle and time frame monitored. After an FTT manifests, we have three possible results: 1. an FBO (Failure [of Price] to Break Out), 2. a BO ([Price] Break Out) or 3. another FTT (Failure of [Price] to Traverse). Which of these occurrences materializes also maters not, as the trader profits
first from the price changes occurring between the FTT point and the resulting 'end effect' (FBO, BO, additional FTT). The trader profits
second from the resulting actions taken (Exit, Hold or Reverse) once the 'end effects' of the FTT play out.
'Seeing' the markets in this manner causes a paradigm shift in one's trading. As a result, one begins to move from a "win / loss" mindset into a "profit a little / profit a lot" viewpoint. Additional tools exist (and have associated documentation throughout ET) to 'fine tune' the analysis. However, all one really needs is Price (and for those of us less skilled, Volume) in order to 'see' these trend changes in real time, and more importantly, to extract profits.
I understand completely the almost instinctual response many traders have to even the suggestion that one can 'see' into the future and correctly anticipate future price direction. To understand the differences between prediction and anticipation one needs to simply alter the way in which one views, not only the markets in specific, but all problems in general. Allow yourself, for one brief moment, to observe a situation from a different point of view. Set aside, for the time being, preconceived notions and 'truths' to which all traders hold dear. Consider, for a second, that what i have posted here actually has merit. After all, you have seen it before Surf ...
Around 2:50 PM Eastern Time Tuesday, marketsurfer asked for opinions on Future Market Direction (See Tuesday Chat Log for verification, or Surf can simply post here his recollection of the event). At that time, I answered "Down." Now, I wasn't simply flipping coins to arrive at an answer. An FTT had just materialized seconds beforehand (see first linked chart above), and as I have pointed out previously, only three things happen after an FTT. All three see price move away from the point at which the FTT occurred. How far price moves depends on other factors, but in
all cases, the market provides
some profit. How much of the profit a trader can extract depends on experience.
I have no product to sell, nor any axe to grind. So, why not take the time to 'see' for yourself what actually
is possible. One can find additional resources for learning these methods by reviewing
Journal I and
Journal II.
Again, take a moment to consider and research what I have written here.
Good Trading to you all, and Happy Thanksgiving to those traders in the USA.
- Spydertrader
