back start next
[start] [1] [2] [ 3 ] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57]
3 Chapter 3 Major Entry Signals My niajof entry signals are as follows, and 1 give tfiem my lilgfuiyi priority. Tfiey are alf derived fron die daily Liar cfiart: The breakout ol a tradmg range. (For readers of Tradiori By The Book, J do not use a Fibonacci envelope here,! The breakoul ol a 1-2-3 high or low. The breakout of a ledge. ° Tfie brtrakout of a Ross hook lo ail of tfiesc (echritgues based on die daily chart, I vjiN ignore any gap breakouts. Gafis nullify rny entry into the n"iarket. trades that trade "Uirough" riiy breakout point. want to enter only those For arv/ wfio have read Trading By The Book, they will immediately recognise my nv:jor entry ptjints. For those who havent read Tradinr] By The Book. I suggest flaying particularly close attention to what I have to say about major entry points. Each will be ilEustrated for purposes of refreshing itjc memory of previous readers and for intiO(fucing titcse concepts to new readers.  17fLf>R 17226 ie>357 15490 Gap ouw iiito a 1 114 li / Gai* ami lonj lar nQi.e up into a Lets take these in tlie order fisted above The Breakout of a Trading Range Most of the time a irading range will be preceded on ilic daily chart by either □ gap or a day wliich is relatively large in si?e froni high to low. The figure on the next page illuslrates this point. 2".
My first sTpp oftur nodnq gap or series of gaps, or a large size uacling (]ny, is 10 begin lo waicli Jor a badiruj rarige to evolve. Here is fiow ti yvi[l usually tiapper;: There Wfll be ri gap or largo one day move up into or down juTo what wilf evcntuafiy be seen as a traciing range. " Tfiere will be a ley (ihis is a leg /. or this \) counter !o the thrust of tlie gap or laryi? day niove. ° Then there wif] bo a second leg back ifie direction of the gap nr large saigie day move. At that point we have a market that, in its most recent action, loo.ks like this , or this \/. from a birds eye view. It is Uien I draw a horizorua line across the liighest higfi, and a [jarallol hori7ontat line across the lowest fow, h wiJI usually take about 10 <lays or so for alf of this U( happen. The iotmations Of \/ constitute "market swine.s." ° In the next few days or so. a third leg will form giving us /, or \/\. This IS th:e beginning ol whal nay turn out to be a trading range. Again 1 draw horizontal lines across the fiigfiest higti and ifie lowest low, Ufiiess the old ones are shil intact. 1 have now established a rndirnantary envelope iliat is detineaied by drawing a simple horizontal line across the lofj of the trading range, and a paiallel line across the bottom of tiie trading range. My next stop is to coijrd die number of tx-irs on the daily chart. "l 4 J <-L yi, I P.I ? cornpipied. Someiirne between 7 1 29 tJays, a foi.dth leg will ustially ..................... Tho trading rai-ge now looks like /\/\, or ii there had beeri a nnv-/ liigh or low. or b(dn, during that last eg, I would liave redrawn tfie envelope. Usually this IS not tHcessary, I can now set a inental alert or a computer alert, or botfi, lo tell rne when I am a[)proaching nf tfiese numbers which represent tfie outer limits of the envelope. Any non-gap breakout of these numbers will consiitute an entry point for me to daytrade. This Will be the least fcegviCfUly occurnng entry leclviigue in my arsenal, but it will be one oi the best. The thrust out of an envelope will yield many a v/orthv.;iiile trade. 1089-1 1 . 7 I I • •   -. I » I ffo ]ontr at the breakout of the high of the trad in r<n>ae. . r r I . - t 1. My entry point is a tradc-tlirouph l>y prices of tiie breakout point. T!ie breakout point is the higfiest high or the lowest low of the trad-ng range. I will enter a uade at or belure the t.ireakout. I vjill not enter if [uices gafi past my entry pui:ii. Th{} next figure wdl serve to illustrate this point.
The Breakout of a 1-2-3 Hinli Or low <--Iiuy a breakout of the rf2 point I 3 in an uptrend. Sell a breakout of the 2 point-in a downtrend. Noie: The #3 point does not come down as low as the 1 poijit in a uptrend, Of as fii-yh as the 1 point in a d(jwn trend, I set a rnemal or comtjuter alert, or both, to warn me of an impending breakout of these key points, I will not eruer a trade if prices gafi over my entry point. wilf enter it only if the markcl trades dl.l.ojigh niy entry poini, "1-2-3 Hicih.4 and lows come orily at riarket turninrj puints diat are in effect major or intermecjiafc liigh or lows, I lock for 1-2-3 lows when a rnarkct seerris to be rraking a bottorn. or tias reaeticd a 50% or greater retracement. I look for 1-2-3 hrghs whr-n a mrrket appears to be makiiuj a top, or tias reciched a 50"o or croater retraceaieot. place. Exact entry will always be at or prior to ifie actuaf brcakcjut taking The next figure iltustaies this entry technique in action. 4132 4flS3 : 37G2 3GGG Lets il ustrate what a 1-2-3 is: | | | | | | | | | | | | |
 1 Infect. l-/-t leu The 1-2-3 low is chaiacleri7od by the fact ttiat the [ ! does not come back (retrace! as low as the \ point, A 2-3 Ingh is , 1 ! izcl by ttie fact the #3 [lomt does not come t)ack (retrace) as high as ihi.: point.
[start] [1] [2] [ 3 ] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57]
|
Menu
