November 3, 2011
- in Uncategorized by schooloftrade
Market Personality helps find markets that are easier to trade
Market Personality:
It’s hard to define market personality, but I know it when I see it.
Vital Signs to look for:
– High average true range (rising)
– Consistent pace of tape
o Consistent speed (volume) of the orders coming into the market
– Consistent BIG MONEY
– Speed of momentum going overbought to oversold.
– Higher-highs and Lower-lows with consistency in one direction or the other.
– Dollar index for a price wedge/narrow ranges
Clues for different types of personality
– Price wedge tells us to expect fake-out breakouts, in other words, the market personality that produces a price wedge will also produce failures at the highs and the lows.
– Inside Day (above PLOD and below PHOD) tells me to expect sideways/range-bound market.
– Outside day (above the range from yesterday) we know the market is looking for higher or lower prices, so we expect a moving market, so looking for BREAKOUTS
– Price channel tells me to trade with the trend, in the direction of the price channel.
– Sideways Range, (no trend) Sideways markets tell us to trade range-bound, so sell the highs, buy the lows, and look for fake-out breakouts.
– It may be very clear that this market is going to be too dangerous to trade today.
Market Personality with Momentum
