single best contributor to the profitability of my trading in the last
couple of years.
And here it is, in all its simplicity:
I trade with the trend.
I execute the trade countertrend.
That is, if I identify an uptrend at time frame X, I wait for a
pullback at time frame (X-1) to enter the market on the long side. If
I identify a downtrend at time frame X, I wait for a bounce at time
frame (X-1) to enter the market on the short side.
If I'm a buyer, I wait for the sellers to take their turn in the
market and show me what they've got. If they cannot push the market
below a prior low reference point, I'll buy and use that reference
point as a stop.
If I'm a seller, I let the buyers rally the market and show me how far
they can take it. If the buying dries up below a reference prior high,
I'll sell and use that reference area as a stop.
If we have a good trending move and a weak countertrend dip or bounce,
we'll usually at least test the prior highs or lows. That means that
even a trade that doesn't roar to new highs or lows can often be
exited with some profit.
That execution edge can make all the difference in terms of
profitability; it has for me.
