How to Trade
Trading profitably is a different story and it requires a trading edge.
What is my trading edge? The FREELY AVAILABLE SwingArm for ThinkOrSwim.
The blackFLAG© SwingArm
The SwingArm is an indicator for ThinkOrSwim which provides a visual representation of price action on a chart. This indicator is a forecasting instrument allowing a trader to plan ahead a potential point of entry or exit of a trade.
In addition, a trader may also use pivot points, regression channels to assist in making trading decisions.
The blackFLAG© Trading Alerts. The Platinum Alert System.
Each index or ETF traded will have its own characteristics and price action will be greatly affected by news events directly affecting the underlying.
For example Oil (/CL /WTI) has a series of events which will cause significant volatility including:
- API Report on Tuesday afternoon
- Weekly Inventory Report on Wednesday morning
and the RIG Count report from Baker Hughes on Friday afternoon.
- Personally, I use Google as my calendar for specific events I track. Also, Forex Factory provides a calendar of news events, global meetings, etc affecting all instruments.
Price has the tendency to move quickly after market open during Globex and US Sessions. It is important to take action based on your price, channel analysis.
A trader may freeze waiting to see if price action confirms the expected move. Once price does confirm and moves as expected, it may be too late to enter the trade requiring a much larger stop loss to protect capital. Trusting your analysis is critical.
Why is Timing so Critical to Trading Success?
In trading, all is timing. Unless you are willing to have large stops, you must have a very good understanding of price action, channels, and support and resistance levels.
When you enter a futures trade on any instrument whether it is /CL Oil, /ES S&P 500 or /GC Gold, etc. timing is critical to entering, and protecting capital.
Change in Trend / Price Action
As a technical analyst, a trader can easily fall pray to a predetermined analysis. Prior to a market session open, traders draw charts, considering trends, channels, intersecting lines, critical levels of support and resistance and based on the review develops an expectation of price action.
Price Action can change at a moments notice. This can occur due to a news event (domestic or international). As changes in the market environment are assimilated by price, trends will continue the trend or change the trend. Being able to adjust positions from Short to Long and vice versa is critical to trading success.
DO NOT GET ATTACHED TO YOUR PRIOR ANALYSIS AND READ PRICE ACTION!