When not to trade

Knowing when not to trade is more imporant than knowing when to take a trade.  Anyone can buy or sell at anytime for any numbers of reasons, and for the most part your odds are 50/50 realistically.

I posted this chat in the morning in the trading room.

I don't use the moving average rainbows for cross overs or any other sort of generic indication.  I use them to judge the trend strength and direction.  The simple answer is when the ribbon is compressed, I find other things to do.

 

 

The end of the day there were 2 potential trades.  One long, one short, as noted by the expansion of the ribbon and the color change of my custom candles.  The market moves in waves, we rush to a price (expansion), then we build energy (compression) for the next move.   This is also a prime example of why you should obey stops and not add to losers.  Had you been long into the end of the day, you would have added all the way down and closed with a nice loss.

Here is the chart I posted on Sunday.  Notice how we fell right to the support/chop level.  Sure it was on news and the Euro being unpretty, but who cares, price showed you what level the market was considered 'cheap'.  Gold and Silver were both up, as was oil.  I am expecting a bounce sooner than later, may up to that resistance level.  We will see, the next leg down has a fair amount of chop areas.

 

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