P1: PIC/PIC c02
August 18, 2008
Printer: Yet to come
HIGH PROBABILITY TRADING STRATEGIES FOR ANY MARKET AND ANY TIME FRAME
We can only make money on price trends, at least until someone comes up with a momentum contract to trade! Even though momentum and price trends often do not move in the same direction, you will soon learn how we can use momentum trends in a simple and practical way as the primary indicator of trade direction and trade execution setups. You will also learn how, by incorporating dual time frame momentum trends in a comprehensive trading plan that also includes the time, price, and pattern position of a market, you can identify whether the market is at or very near a price trend reversal.
MULTIPLE TIME FRAME MOMENTUM STRATEGIES In over 20 years of trading and educating traders beginning in the mid-1980s, Multiple Time Frame Momentum Strategies have become the most powerful trade direction and execution approach I’ve added to my trading plan and taught my students. For at least the first 10 years I traded, I never used an indicator. I was basically a pure chartist using time, price and pattern position to identify trade setups and targets. My strategy was based on Gann, Elliott, and Fibonacci. In 1989, I released what I believe was the first futures trading home study course, called the W.D. Gann Home Study Trading Course, based on Gann, Elliott, and Fibonacci trade strategies. This course is no longer available. It wasn’t until the late 1980s that I even had a computer with a charting program. I studied a lot about indicators and discovered I could always find an indicator or make a change in a lookback period or other setting for the indicator to confirm whatever price trend bias I had. There was never an indicator on my charts, simply because everything I read and tested on indicator strategies didn’t seem to work out, and I just could not find a logical and practical application for indicators. Around the mid-1990s, at the prompting of one of my students, I began to look at how a momentum indicator could help confirm the pattern and price position. It took a couple of years to work out practical strategies for a momentum indicator to be a part of a realworld trading plan. Then, several years ago, I started working with momentum strategies using multiple time frames and was blown away with how valuable they could be as part of the trading plan, to identify trade direction and trade execution and to confirm a potential price reversal at price or time targets. Like everything I teach in this book, these strategies can be used for any time frame and any market, from day to position trading.
THE BASIC DUAL TIME FRAME MOMENTUM STRATEGY I first teach the concept and application of a momentum strategy using two time frames. Later I give examples of how to use more than two time frames, but two are all you need. You will learn how to integrate this strategy into your trade plan.