[ Pobierz całość w formacie PDF ]
.We will assumesome appropriate context that indicates a choice of that Confluence area as our long entrypoint.We'll choose 17220 as our specific entry price and call that point 'X.' Theassumed context could be something previously discussed in this book or something youhave chosen as an appropriate indicator.For example, maybe you want to look at put-callratios, Bellinger Band extremes (on the pullback), a respected recommendation, aCommitment of Traders report, or whatever.A deeper D-Level, let's say just below the17080 level, will be the protective stop placement area 'Z.'Problem: How can we best enter this market at 'X,' where we assume support willmanifest?Answer: Different strokes for different folks, hence there is more than one Fibonacci entrytactic.NOTE:Be sure you understand how I have framed the forthcoming discussion, before you go on.The next series of important examples all hinge on the preceding paragraph. Chapter 13 Fibonacci Tactics 219BONSAI: AN ENTRY AND STOP PLACEMENT TECHNIQUEAlthough I rarely use this particular tactic, I include it for those of you who arepsychologically suited to it.This would include traders who are willing to accept a lowerpercentage of winning trades than would be possible using other techniques described inthis book.A number of former floor traders I have trained like this technique.HyperHank would likely be a Bonsai enthusiast.Those who utilize Bonsai believe, perhapscorrectly, that their ultimate level of profitability will be enhanced by this entry tactic,since they typically trade more often and keep the level of each loss suffered very low.Here's how this very simple strategy works.You have, as indicated above, a pre-calculated D-Level entry at point 'X.' Using Bonsai,you have a preset money or point stop at 'Y,' irrespective of additional DiNapoli LevelsCHART 13-1You enter both orders at the same time and hope the stop isn't hit.If it is, and the priceimmediately gets back above 'X,' you then reenter the trade at the market and again placeyour stop at 'Y.' 220 DiNapoli Levels.If the original stop at 'Y' is hit and the price remains below 'X,' then see if the contextyou choose to support the trade is still valid.If it is, you select a deeper DiNapoli Levelupon which to enter the trade and place another money stop below it.Bonsai players have 'Y' defined differently for each different Time frame they may chooseto play.The amount is usually determined by individual experience in a given market.Between 55 to 85 points is very typical for the five minute S&P, while three to five thirty-seconds (3-5/32nds) is common for the five minute US Bond market.The advantage ofusing Bonsai is its simplicity.Its ease of use frees the mind from more complex stop lossexit strategies and therefore may preserve a more relaxed attitude in the trader.He istherefore free to properly pursue the next trade in this, or other markets.There are many disadvantages.Bonsai players typically disregard volatility from one dayto the next in their selection of pre-set money (or point) stops.If they don't haveexcellent brokerage services, the frequency of trading can be costly in both slippage andtransaction fees.They also must have quick floor access to reenter orders if they aretrading short term.Although the exit criteria is simple, trades require constantobservation, since contingency order criteria left with a typical broker would likely be toocomplicated and subjective for the broker to be held responsible for the result. Chapter 13 Fibonacci Tactics 221BUSHES: AN ENTRY AND STOP PLACEMENT TECHNIQUEBushes is the technique typically used in the examples in this book with the exception ofthose described in "Advanced Comments.".You enter your buy above one D-Level andhide your stop behind another.It gained its name from a market professional whoattended a private seminar some years back.He crouched behind a large plant I had in myoffice area.Then, as he shot at another attendee with his finger, he indicated that hisfavored method to capture profit was to hide behind the bushes, jump up, take a shot, andduck back down behind the bushes.The entry and stop strategies described in CHAPTER11 (AN IDEALIZED TRADING EXAMPLE) are clear examples of Bushes.Standing up andtaking the shot is akin to your entry before one D-Level, while crouching down behind thebush is akin to hiding your stop behind another D-Level.The differing trade entrystrategies described in CHAPTER 11 are simply variations in where to take the shot andwhich bush to hide behind.The obvious significant difference between Bonsai and Bushes is the lack of "cover" for*the stop
[ Pobierz całość w formacie PDF ]
