January 14, 2011
- in Uncategorized by schooloftrade
Pace of Tape indicator & The Dollar Index Correlation FAILURE
Questions:
– When does the dollar correlation NOT work?
– Negative correlation (dollar drops = everything rises)
– 2 example of when it does not work
– Low volume = fewer traders = less consistency in the correlation (red pace of tape, no big money, low ATR)
– When other economies seek shelter in the gold market
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– Where can I find more info on JJ?
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– Which market pays the best?
o If you trade in the US, the best market for experienced traders will be the DAX
o Wide ranges, fully electronic so its cheap, and it settles in EURO, so you make the currency exchange when you get paid on it
o $2500 margin
o $25 eur / point
o Only ticks in /50 pt increments.
o If you’re a new trader, the best markets to trade are crude oil, gold, euro and Russell
– Wave patterns and momentum
– Speed and Size required for entries
o Speed = always want rising speed (color is ok, increasing is necessary)
o How many contracts is a BIG MONEY buyer?
o It all depends on the market
o Crude/Gold/Russell (illiquid) = 50 lots is enough (10 lots x 5 of them)
o ES/FESX/ZB/ZN/Euro (highly-liquid markets) and we need to have MORE BIG MONEY to move them around.
o Too much liquidity = narrow ranges = less profit
o Less liquidity = wider ranges = more profit
o ES/FESX/Euro/ZN/ZB = min of 300 lots
– Reading the Pace of Tape Indicator
– Measures the speed of the orders coming into the market
– Does NOT count volume, and it does not know how many contracts.
– Rising speed = confirms the move (take the trade, let the trade run)
– Falling speed = sign of a reversal / negates the move (avoid the trade, tighten your stop, or take your profit and run.
– The best way to use the POT is to determine short term market sentiment.
– Divergence Indicator and our method of using it
– Watch the video in the ADV Course
– Use the NOTES that we made for it
– Watch the members training that was recorded and posted. 11-17-11
o Designed to be a simple and streamlined method to trade
o Uses limit orders
o 1:1 risk/reward ratio
o Simple patterns
o Slower timeframes with tight stops so seeing the patterns will be easier.
o No trade management, set it and forget it.
o Teach you good trading habits
o Start w/ 1 contract and over 2 weeks this FT method will change the way you see your charts.
