DATE 0301 0302 0305 0306 0307 0308

0309 0312 0313 0314 0315 0316 0319 0320 0321 0322 0323 03 26 , 032? 03 28) 0329 0329 0402 0403 0404 0405 0406 0409 0410 0411 0412 0416 0417 Place

Note: I trade from continuous contracts. All prices have been adjusted to September prices, although I traded the June contract at the time.

orders

0418 35260

0419 34760

0420 34500 0423 34060

Leg up #1 Rising highs and lows

Leg down #1 Falling highs and lows

Leg up #2 Leg down #2 Leg up #3 - discard up leg #1

Leg down #3 - discard down leg #1

Leg up #4 - discard up leg #2 This high will be matched. This low will be matched. Leg down #5 - discard down leg #2

Matching low.

Leg up #5 * discard up leg #3

latching high by 1 tick (.05 points)

- Buy counter-ieg-trend breakout at 35265

Sell leg-trend breakout at 34795

34670 Breakout filled at 34795=day 1

34390 day 2

33930 Out at objective 34545=day 3 33640

[Market swing

Market swing

Continue with optional additional contracts.

Out at 343ˆ

Figure 8 Is a picture of what happened. Lets notice a few things.

We start looking for matching highs and lows when a market shows signs of congesting. Legs of swings are getting shorter and shorter. The market is chopping around. A leg may consist of only one day. "f<l"u-yf-

We discard the oldest leg in a direction whenever a newer leg in that direction is being made.

We look to enter the trade with a tighter stop in the trend direction in which the current leg Is moving. We use a wider entry stop in the direction that is counter to the direction of the latest leg. We call in our order every day because the leg-trend can change daily.

If one of our stops is hit, we are in the market and the opposite side of the ledge is our initial catastrophic stop, if we can afford it we then double our stop, so that if the market goes against us before we get out, we will automatically be entered in a trade simultaneously with being stopped out.

Qur PrPULPbjective! is a n a mo u nt, e QM U? th e h eight ofjhejedge. in addition to our catastrophic stop, we"place a sp "order beyond ffiepoTht of present price equal to the number of points that are in the ledge from top to bottom. This is done as "Order cancels order" so as to eliminate our catastrophic stop if we get a fill.

In the example above, the height of the ledge was 35255-34800 = 455. We place an exit stop at 34800-455 = 34345.

Our entire day order entry is: Buy one June S&P 500 contract at 35260 stop limit, and buy one June S&P 500 contract at 34345 stop limit, order cancels order. Sell one June S&P 500 contract at 34795 stop limit.

We move our stop as quickly as possible to breakeven. If we move our stop, we automatically cancel our catastrophic stop, and so there is no point in making a reversal entry out of it. If we have doubled the catastrophic stop so as to obtain a reversal, we remember to cancel both orders if we happen to make the change during the day. Otherwise, as a day order it wili be canceled automatically after the market closes.

»-**-lf r jsr g at j3i)jsclLYl5 npt Ji it„.on. .t he. tbi/.d-day,.. we p la ceJt a s. a. re gu Lac. market stop order the fourth day. That way we will automatically be filled on or about the open if "prices havent reached our objective. Make this order on an order cancels order basis if a reversal order is also being called in.

A warning is in order: Do not attempt to reverse on the intraday charts. There is generally not sufficient room to make back your losses plus overhead.

One last thing, a ledge remains in effect until the leg that created it is canceled.

Thats it! Thats ail there is to it. The win ratio is very high in this method of trading. You can scalp the market consistently for small to major profits on a regular basis. Ive not found a market in which this technique doesnt work. The only differences are in how often these situations occur. Use this technique along with your regular trading. However, it can be used on a stand alone basis if you are unwilling or not able to trade longer term.

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