April 13, 2011
Previous High of Day (PHOD) and Previous Low of Day (PLOD)
How do we use the PHOD and the PLOD in our trading
o We always have the PHOD/PLOD somewhere close to us, so we frequently use this technique to make profit
o Here’s how to use them:
§ Locate them both
§ Where are we in relationship to these levels?
§ Are we above? Are we below?
§ This tells us a valuable story
o If we are above the PHOD we know the buyers are in control
§ Buying pullbacks are assumed to be highest %
o If we are below the PLOD we know the sellers are in control
§ Selling retracements are considered higher %
Golden Lunch: video will go out @ 2pm EST today.
How do we enter wave patterns:
– Aggressive entry: as soon as you test the falling trigger line
– Preferred Entry: use a faster timeframe and look for a swing low (wave short) or the swing high (wave long)
– Conservative entry: break of the ‘pressure point’
What makes momentum curl?
= mass (size) x velocity (speed)
· Momentum changes = more size and more speed
· More buyers with more speed = rising
Momentum to curl down =
– Fewer buyers and more speed
– More sellers and more speed
More sellers with more speed = falling
Momentum to curl UP =
– more buyers and more speed
– fewer sellers and more speed
what do we look for after a big drop?
– Check momentum, this will tell me the direction I cant trade in (overbought/oversold)
– Look to see where your levels are above and below you. Beware we may still be on the move down/up
– Always look for a big pop after a big drop, but follow those rules
Different Order Types:
Market orders offer the fastest execution speed and under most conditions, guarantee that your order is filled. Be wary about using them on low volatility securities with large spreads though. You might get filled at a much higher/lower price than you expected.
Limit orders allow you to specify the price you want to be filled at. These orders are useful on low volatility instruments because they ensure you get filled at the price you specified or better. Take note that limit orders are not guaranteed to execute and may cause only partial fills.
The stop-limit order offers the trader complete control over the order. Like a stop order, the stop-limit order waits until the specified stop price has been reached. Unlike the stop order though, the stop-limit order becomes a limit order instead of a market order when the stop price is reached. The drawback for a stop-limit order is the same as all limit orders; the trader might not be filled if the limit price is never reached.
· Limit Order = price guarantee, no fill guarantee
· Market Order = fill guarantee, no price guarantee
· Stop Orders = market if touched, so they are a resting order that turns into a market order when the price tests it.
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