Short Term Trade Tip – Horizontal Lines

Obviously my short-term trade set up is a thing of beauty, and relatively soon – will be made available to the rest of you. But aside from that, I want to pass along a simple little tip – that could provide you an “edge” here in the meantime.

When you drill down to smaller time frames such as a 1H chart (1 hour candle formations) or even a 15 minute, or 5 minute – take out your crayola crayon (and not your laser pointer) and draw a line THROUGH THE MIDDLE OF THE CONGESTION/SQUIGGLES. It will be this “price level” that is currently at play – and not the “highs and lows” of the given time frame.

For the most part anything smaller than a 1 Hour chart is frankly just “noise” so the highs n lows are really not as significant as the middle ground where price is centered. Once these lines have been drawn – a trader can then focus on a “realistic price” to consider for entry or even stops etc, as the volatility short-term will spike/fall and give you all kinds of levels – not exactly relevant to your trading. On a 1 hour Chart 30 – 50 pips on either side of this “central price” is completely normal, and isn’t enough to even get my heart beating – in consideration of dumping a trade.

If you don’t understand the given volatility on the time frame you are viewing – you will get killed.

Take out a crayon and not a laser pointer – and plot the “middle of the squiggle “.

As simple as it seems – this can easily be the difference in catching many, many more pips in any given trade, based on the fact that you have not skewed your lines of S/R to reflect the highs and lows of smaller time frames….but the center – where price is currently fluctuating.

Thanks Kong!

9 Responses

  1. scollins1313 January 29, 2013 / 12:56 pm

    Forex Kong,

    Thanks and will look at the FXA chart…Take care.

    • Forex Kong January 29, 2013 / 1:06 pm

      A nice move in Aussie today as suggested – with significant upside potencial.

      It’s too bad there arent better alternatives in the stock markets – for those not trading in a forex account. You’d think there would be a relatively easy way to play it – and not at 104 buks.

      • rolo January 29, 2013 / 3:12 pm

        Risk on trades moving nicely today Kong – thanks for the entry calls – looks like the SPY is reaching O/B and will be ‘running on fumes’ soon but pretty much everyone is calling a (short term) top just about here so to confound everyone I guess it could just keep going for a while longer.Great work Kong and looking out for ongoing developments etc

        • Forex Kong January 29, 2013 / 3:25 pm

          Again thank you so much Rolo for the positivity!

          I agree with you 100% as per a post or two ago “blow off top”. This thing is surely on fumes for several reasons – and one really needs to stay nimble here near the highs.

          I for one will push a “touch” further – but for the most part – will be looking to “cash is king” coming soon – to a theatre near you!

  2. otherwisemistaken January 29, 2013 / 2:49 pm

    There’s always the Aussie futures — /6A

    Love this blog and your comments at the rock climbers. You are a voice of sanity in the wilderness 🙂

    OM

    • Forex Kong January 29, 2013 / 3:23 pm

      Yes! – great point!

      I rarely here that my voice is one of “sanity” so please – keep the comments coming.

      Thanks for the positive words here…I really appreciate it.

      • David January 29, 2013 / 4:09 pm

        Perhaps this blow-off top can begin tomorrow with the US ADP, GDP and the FOMC statement.

  3. schmederling January 30, 2013 / 6:06 pm

    Hey Kong,

    All seems to be well…. 🙂 I have been dipping into short usdjpy today just a little here & there, looks like we hit a little wall in the upper 91s…. is it THE WALL…. still remains to be seen but I am testing with caution for sure.

    With the DXY rolling over I think for now its a go…. go … go…. 🙂

    • schmederling January 30, 2013 / 6:07 pm

      Also gold priced in Yen has peaked…. another area I have been looking at for a while….. just a thought of mine…

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