How you can unlock playbook trades to increase trust in your trading

 

It’s simple to illustrate by walking through real trading


Hypothesis

While GBP, YEN and EUR are selling off, pronounced sympathy* selling occured in AUD

*A sympathy trade is when a like instrument attracts similar trading by association rather than underlying fundamentals


Supporting evidence?

  • Last week, selling breached March's aggressive buying price of 0.7385

  • A move higher and new attempt to break the same price failed


Your conclusion is remaining longs exited for a loss

And new longs have remained onside


Why is this a vital distinction?

The current market environment does NOT lend itself to multi day swing trading

Pros have adjusted

Less skilled traders haven't adjusted

So you hypothesise:  

Buyers who remained and suffered exiting for a loss were unskilled traders

Plus:

The market will show you if you’re on the right track if:

  • New buyers build positions at wholesale prices

  • These new buyers move onside as short traders exiting their losses fuel price higher

Clues the above will happen?

  1. Anchored VWAP as of Feb 24, 2022, attempted breach so far unsuccessful.

  2. Closing month VWAP for March now anchoring to upside.

  3. Current WVWAP is now anchoring price to the upside.


What if the market moves higher?

You can build more trust using current themes

Examples from this trade with charts:

  1. many failed attempts to break pre-pro lows

  2. HKE VWAP 1st deviation anchoring price to upside

  3. A quick visit then leave to prior day close

 
 
 

TL;DR

Increase trust in your trading when you:

  1. determine what the crowd is doing

  2. determine what the pros are doing

  3. look for many points of evidence to support above

  4. wait for the market to show you your hypothesis is working

  5. use current themes to time entries/determine risk levels

 
Adam Fiske