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40

Trading By tlie Boole - Part

syiss

ms23 0=7306 H=7324 L=?2% C=73ig Hf1A=7309

Figure 9 On 5/23, before the rnarket opens, I have called in my order to sell at 7313. I get filled there shortly after the open.



suiss fkahc

suiss franc

H=7324 L=7296 0=7319 HfIA =7307

Figure 10 How did f know to place my order at 7313? I peeked. Look at the reading of the vertical cursor, the offset moving average of the high (HMA) is 7313 That L wherPhP w°,?h he Tuture it hows

S be ?7513 7; ° ° MA



A Difference of Attitude

Well, ("t looks like Ive put my foot in my mouth this time. Why dont I just enter an established trend on the breakout of a 1-2-3 low or a l-ll-llt high?

The fact is that I could do that, but the difference is in my attitude at the time of entering the trade.

When t am trading the breakout of a range, or when I am trading the breakout of highs and lows, I tend to be very relaxed. I am waiting with my orders in ptace for the market to come to me. Im not impatient - not at all in a hurry. If my price is hit, Im in for better or worse.

But when Im trying to enter an established trend, there is an urgency about my trading. I have missed the initial move and I dont want to miss any more. 1 cannot wait for the market to come to me. I want in and I want in as soon as practicable. Therefore I am wilting to monitor the market very closely. This is something I dont normally do. I prefer to just place my orders with my broker and then find out Im in a trade because he calls me up and tells me the order has been fitled. But this is different - because my attitude is different. I am willing at this point to compute the 4 day MA and call my broker daily with a new order. The anxiety factor is greater here.

This raises another question - why dont I use this technique to add to my position in a trend in which I already have a position? The answer is two-fold.

First, when 1 already have a position, and the market is going my way, Im very relaxed. 1 can afford to wait and see enough momentum to carry prices through the next #2 point, whatever that is. There is no urgency to add to my position, so I can afford to trade with more safety.

Second, if 1 used the 4 day MA to keep entering new positions each time it was touched, I coutd end up overtrading my account. The 4 day MA is likely to be hit many more times than there are high or low breakouts. My positions woutd be too bunched to suit me, and I would give up the safety factor of the breakout momentum. -



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