July 8, '04. Let them build it; a trade will come.


Caution: patience is required for successful trading. Resist the temptation to take trades outside of your setup universe. And today's opening hour was just such a temtation. Squint your eyes on the chart above in the section that precedes the trade entry arrow. You should be able to see a large W, a classic bottom formation, one of about 5 that occur commonly in the opening hour when trading begins with tiring consolidation instead of an immediate trend. A pattern once formed is once recognized. A convenient zigzag was then ideal for an entry, marked with the red arrow. The trade was worth some 25 points in the mini Dow and about 3.5 in the ES at the gap closing exit signal. Read about this and other formations under the type-of-day category called a Test-and-Reject, in the manual Pivots, Patterns and Self-Recognition.(click image to enlarge)