SP 500 Dow Cash and USDJPY
The relationship between the equity markets and the yen, shown in Figure 6.1, is an important intermarket correlation that traders follow. These correlations can reach over 90 percent. Sometimes the S amp P 500 leads the way, and at other times, the yen leads the way. Generally, the expressed sentiment relates to global risk aversion or risk appetite. When the U.S. equity markets are attractive, they act as a Figure 6.1 S amp P 500 Yen Line Chart Figure 6.1 S amp P 500 Yen Line Chart magnet for...
Price Break Charts and the Global Financial Crises
The global financial crises, preceded by subprime market problems and precipitated by the Lehman Brothers collapse, caught the markets and experts by surprise. The magnitude of the collapse in conditions was unprecedented. A closer look at the evidence shows that the signs were detectable, particularly with price break charts. Price break charts also can be a useful tool for detecting key changes in financial conditions and monitoring the status of a recovery. Price break charts can help...
Momentum TradingSixLine Break
In many markets, economic data releases or sudden news events can cause a reaction in the market. The price action moves sharply, chaotically, in a spike and surge. Such movements pose seemingly insurmountable challenges to traders. A common practice among traders is to stand on the sidelines and let the market react to the news. However, price break charts provide a strategy for entering a trade in the context of high-momentum or volatile developments. By changing the parameters in price break...
FlipFlop Reversal Entry
This strategy exploits the probability that when a flip-flop appears, any immediate reversal that occurs will be quite strong. To play this strategy, the trader will place a buy or sell stop order as soon as a reversal occurs that is counter to the trend Figure 3.5 . If a flip-flop occurs, the order will be triggered. Source Chart copyright www.ProRealTime.com Source Chart copyright www.ProRealTime.com Source Chart copyright www.ProRealTime.com Source Chart copyright www.ProRealTime.com
Abe Cofnas
Copyright 2010 by Abe Cofnas. All rights reserved. Published by John Wiley amp Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or...
The Decision Path of the Trader
Since this book is about improving trading strategies and tactics, a good place to begin is with a brief review of trading as a decision process. What we are referring to here is the path of choices taken by a trader leading from selection through entry, management, and exit of a trade. What we mean by decision path is the set of logical steps a trader follows in order to initiate a trade. First, the trader has to perform a scan of the market conditions. The decision process in trading any...
Introduction
The purpose of this book is to give beginning and more experienced traders a fresh look at the principles and applications of alternative charting types. These charts share one significant attribute they display information independent of time. These types include price break Kagi Renko point and figure, and cycle charts. These charts are important because when the trader applies them correctly, they provide different views of the shape of market sentiment as well as the shape of trends. The...