Boot Camp #4 – Lock Step

Now you have an understanding of how the market is jay-walking.

As a next step, we need to get your movements right.

First thing is that there is no general trading. Buying and selling without any system is merely scrambling about, and this kind of hit and miss “trading” brings shame to the “trade” in general.

Optimal trading is when the trade does not move much against your direction (minimal stress) and you are in it for as long as it is feasible (maximal gains).

The trading I am about to teach you is an optimal one.

You have to be patient. You must wait for the right condition. Always.

Get the bias right: Download the Compass Line for free.

You already know that the heads are the targets.

What would be your entry then? A head? Wrong!

Your entry is always a failure. A failure at the left shoulder.

You need to make limit buys with buy stops: when the price passes by the left shoulder, you must place a buy stop above the price. (Or simply buy a Reversal EA routine from me for $99 – my routine is actually following the price 2 pips behind until it punches into it.)

Once you have the entry right, your exit would be:

– for half position the first deeply oversold (80) hourly RSI(8, hl2

– for the remainder, you want a momentum divergence on the 4h chart (later about this)

 

Here is a little preview on how the left shoulders operate. I made this for 1h or 30m.

_Compass_Left_ShoulderV1_1

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Homework: how much of your shorts should you have covered at 1.1732?

Instead of closure to this lesson now I’m going to show a piece of a conversation that I conducted with an imaginary student today.

— Teach, about the Euro sell off lately. Instead of over analyzing things, would not be better simply to notice the failure/divergence at the Deeply overbought level of 1.1918 on your Comfort Levels indicator and make a bet that price would correct back down to the overbought neckline of  1.1742?

— Bravo! That’s exactly what happened. You can think well on your feet. You would make an excellent fund manager. The percentages, such are 5, 10, 20% movements are things to keep an eye on and make decisions by. These numbers are for real, unlike the Fibonacci ones that are only in your head. I started writing my memoir about trading. I have not settled on the title, but it has a subtitle already. “From Fish of Blood to Blood of Fish”. I would like you to be the first one to read the first chapter.

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