Boris Schlossberg
BKTraders and Prop Traders Edge
It doesn’t matter if you are Warren Buffett holding positions for decades or Ken Griffith holding them for milliseconds - there are only two ways to trade.
In trading you can either go with the price action - or in traders parlance trade “flow” or go against the price action or “fade” the move.
If you are going to day trade against trend need to know three things - what to trade, when to trade and how much profit to go for.
Here is a set up I trade every day in stock index futures. During the European open (around 4 am) stock futures usually make a session high or session low that is fadable for at least 20 points. And even if the trade doesn’t work the first time it usually resolves in profit on the second or the third attempt.
But trend! Trend is something different altogether. Trend or “flow” trading has a very specific tell that can give very accurate reads on the market.
Here is my proprietary bounce indicator in Flow mode. Notice anything? Flow trades which are bright green tiles on the chart tend to bunch together. Once a flow trade takes shape it tends to be followed by another.
So what does that mean to us as retail traders. Simple. We only take a flow trade if the prior trade hit the take profit. If the prior trade was a loss we STOP TRADING until flow turn profitable again. Using this stop and go method we avoid the dreaded “churn” and increase our chance of winning trades tremendously.
So here is the surprising takeaway for day trading. To trade counter trend you need to keep trying until you find the turn in the price action. But to trade trend you need stop and go stop and go until you sync yourself up with the trend move in the market.
That’s pretty much the opposite of what most traders do - but now you know!
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
EUR/USD weakens as US jobs data trims Fed rate cut bets
The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index inflation report.
GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms
The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.
Japanese Yen strengthens on renewed verbal intervention
USD/JPY extends its losses for the fourth successive session, trading around 152.90 during the Asian hours on Thursday. The pair weakens as the Japanese Yen strengthens following renewed verbal intervention from Tokyo.
Editors’ Picks
GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms
The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.
EUR/USD weakens as US jobs data trims Fed rate cut bets
The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index inflation report.
Gold remains on the defensive below two-week top; lacks bearish conviction amid mixed cues
Gold sticks to modest intraday losses through the Asian session on Thursday, though it lacks follow-through selling and remains close to a nearly two-week high, touched the previous day. The commodity currently trades above the $5,070 level, down just over 0.20% for the day, amid mixed cues.
UK GDP set to post weak growth as markets rise bets on March rate cut
Markets will be watching closely on Thursday, when the United Kingdom’s Office for National Statistics will release the advance estimate of Q4 Gross Domestic Product. If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year.
The market trades the path not the past
The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.
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