How many daily trades are essential? Detailed trade write-up

What do you see?

1. You can see trading occurs within the playing field shown in the first chart.

2. You also see the exiting (pink circle) after hitting the first interruption.

3. The interruption is temporary, and the trading is resumed.

4. Buying, adding, and taking profits continues until reaching the playing field boundary at 0.6397.

The power of the playing field

You'll see in second:

The boundary at 0.6397 marked the top of the move. 

But if you look at the first chart - it's not 'prior highs' or 'price resistance'.

It's a unique calculation that leads to superior performance because the crowd is either:

1. Unaware of the relationship between price and relative value.

2. Or they lack the expertise to identify the correct value.

Satisfying outcomes relies on correctly identifying playing field boundaries.

How many trades was that?

While there were several buying and selling transactions - they were all part of a single trade idea which lasted about 50 mins. 

From a workload perspective - it's not daunting to make the number of trades you see spread out over nearly an hour. Agree?

What happens next?

The following chart view shows the price running down after reaching the upper playing field boundary.

Guess what?

No trades were taken shorting the move down.

And that's because not all movement is opportunity...

• The first half of the move down was too fast (for me) to trade - meaning it moved at a pace beyond my skill level.

• And the second half moved into an area clearly marked on the game plan as "stay out" (see first chart). 

But here's where it gets interesting:

Many people are seeing the move down as a long opportunity because:

1. Zoom out and you see a market trending upwards.

2. The market clearly didn't reach prior highs or 'resistance' levels.

3. Therefore price merely had a pullback and now is continuing up - or so it seems...

Below you can see attempts to fade the move to the upside aka trading against the current direction.

Caveat:

Fading is more challenging. You can see the first attempt was a loss. Followed a subsequent attempt which was profitable. 

But more importantly:

Several proprietary observations concerning relative value (orange line) provided the context to enter short.

You also see price traded into the 'stay out' zone as marked on the very first chart.

'Stay out' areas are not intended for opening new trades.

Yet holding part of an existing position that trades into the area is fine.

Some profits were taken at the edge of 'stay out' and the balance at the next playing field boundary.

FYI: The entire sequence of trades (5 transactions) lasted 10 minutes.

Then what happens?

Finally:

Price moves into the lower playing field.

But what makes this playing field different to the earlier playing field is its suitability for adding to your winners. 

You see:

A large problem facing traders is knowing when to add to winners and when not to add to winners. Agree?

And I should know...

It's something I struggled with for nearly three years. Intellectually I knew the next step in my trading was to add to my winners. But when I did - I turned the winning trade into an overall breakeven or worse, a losing trade. Sound familiar?

But for every trading problem, there's a solution. And without going into its origins, playing fields not only provide highly accurate guides to where price will reverse but also inform you of optimum areas for adding to winners. 

In the following chart:

Annotations indicate adding to the trade. 

Once again several executions contribute to a single trading idea. The entire sequence of trading lasts for about an hour.

Are you seeing a pattern?

From start to finish the session you're trading is about 5 hours duration.

You can trade more than one session (eg Asia plus maybe half of London) if you want to - or not. 

Typically you will have prepared 2-3 trade ideas for a session.

Each idea might require 20-90 minutes of active management involving several executions. 

In between managing those core trading ideas, you can: 

• Have a break

• Take a couple of 'easy-money' scalps (for experienced traders only) should they arise

• Review your game planning 

• Review your prior trades, including recording the periods where you traded.

But!

This is only achievable if you have enough context for a high-quality decision-making process - as demonstrated in the trading above. 

And when you do - your trading resembles a manageable workload you can sustain year after year.