Precision trade entries allow traders to time their trades perfectly for less risk. For example, back on August 13th, we wrote that we believed Corn had put in its top at 849, based on the THD indicators and volume divergence. Basically, we believed that the ADX and RSI was overbought and, with the volume divergence, price should start downwards. It did — pulling back to 747. That’s over 102 points on Corn. Of course, there were many, many opportunities to enter shorts during this time on intraday charts — after all, we knew it was going down to the ATR.
Micah also stated that it looked like Soybeans had made a top on the daily, but, typically, Soybeans will top after corn. However, there were numerous divergences, indicating a potential top. While we did take a short on soybeans intraday, as it was pulling back, the sellers were diminishing. This indicated that another high would be formed (meaning it would top after Corn). The top on Soybeans came in on 9/7/12 on the weekly chart and entry was generated on the daily last Friday, with an expectation of the ATR on the Weekly at 1565 4/8.
Precision Trade Entries on Futures
Yesterday, I was talking to a relatively new THD client that has years of experience in the markets. He told me that he had been trading for years and had never seen anything like the THD indicators, especially the THD ATR. He had read our newsletters and was watching the grains. As others were watching the grains being “slaughtered”, he was trading them because he knew where price was going. Then he started watching the Euro as the values were high. Since he is a seasoned trader, he took the indicators and applied them to his own charts. He was amazed that on the Euro, after his long position, he had three magenta peaks on every one of his charts — he knew to go short immediately.
Was this just an isolated event on the grains? No. Last week, we were talking about Gold topping out, as well as the Euro on the 720 minute and daily charts. This meant that price would go down towards the ATR on both of these charts. Gold made the magenta peak yesterday on both the 720 and daily charts. The Euro is just starting to form the magenta peak on the 720 and daily charts today.
All of these trades were identified by using the TradeStation RadarScreen or Multicharts Scanner. We knew we had high ADX values and divergence was coming in on the charts. We knew that all we had to do was wait. We knew our market direction. We knew where price would be going. All we had to do was wait for a low risk setup.
Because we can identify when the markets are moving, when they are pulling back, and where they will potentially pull back to, we can sit and for our precision trade entries. We are not consumed by the “what ifs” scenarios that many other traders face. Instead, we use precision entries that always incorporate a low risk.