Tuesday, August 10, 2010

What's in a signal.

When is a signal , a signal? Is it when it forms completely? Or doesn't form at all? Or is it in the run up into a recognized signal? Well, all of the above.
You can make a trade off of all of these and some will consistently work better because you are ahead of the crowd,
Probabilities come into play as well. Every day I have many trades come my way because I have played the probabilities instead of waiting for signals. I guess you can say that the entire days candles are a signal in themselves as they tell the story of support , resistance, control.
Probability means that one outcome is favoured over another one. If you are long and the candles are were large and strong but are now shorter, this is a signal that the momentum is drawing to a close. Listen to this signal and be prepared to exit and possibly go the other way. Probability says this is the more likely outcome depending on market conditions.
Signals tell me when to enter and when to exit. It's up to me to do nothing else but act on these signals generated by my system. A trade will either be a profit or get stopped out by my strict application on my system.
Grey areas of interpretation can be minimized by simplifying to the starkest degree possible your trigger signals and your overall input noise.
Not having expectations or worse, profit targets means you can remain flexible in response to market gyrations. Nothing is going to continue moving in your favour so work with the market flow.
The markets sometimes speak loudly and at other times they whisper. Are you hearing what they are saying?

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