NAP TIME
Common transaction details
Burr quotation
Drawing morphological boundaries is not a strictly accurate science. In fact, the market doesn't care where I draw the boundaries. There is nothing magical about geometric boundaries of form. Ideally, a secondary or intermediate high/low connection will then provide perfect boundaries, but this is the exception and not common. Boundaries should delineate areas of dense trading, even if that means crossing some columnar price line or candle line.
In some cases, the daily chart price will Pierce the boundary sharply during the day and then randomly retrace into the pattern. This is what Messrs Edwards and McGee call the 'out-of-line movement' above. While burr moves pose a degree of challenge to trading, history suggests they are just a one - or two-day annoyance. There is no need to redraw the morphological boundaries to accommodate this situation.
Back to the test
My experience over the years is that the best deals break out cleanly, quickly and directly, and never look back. In fact, I think my trading performance would have been better if I had been able to close out losses at the end of the day. I want to do that to get that kind of performance. Often, however, a breakout is followed by a retrace and testing of the original pattern boundary for several days or a week, leading to hesitation in trading. This type of retest is normal, and as long as the retest does not challenge the ice line, traders should not worry.
Is it wiser not to take a position immediately on a pattern break and wait for a price retest to take a position? My answer is "no". Let's think about this logically. By not getting in on a breakout, traders are missing out on trades that move cleanly in the direction of the breakout, which happen to be the best opportunities. Backtested markets are more likely to fail than non-backtested markets.
Stop: target price
One caveat: there is no guarantee that any market will reach its target. Traders should be alert that the market may run out of steam before reaching its target.
More time
As a trader, I have mixed feelings about the relay pattern, depending on how long it lasts in a major trend run. Long trend pauses (say, three or four weeks) may wear out my patience. I prefer to see shorter breaks in major trends, especially when the entry breaks are stronger and form a pennant shape.
Futures Sniper: 21 Weeks of Trading Winners
Burr quotation
Drawing morphological boundaries is not a strictly accurate science. In fact, the market doesn't care where I draw the boundaries. There is nothing magical about geometric boundaries of form. Ideally, a secondary or intermediate high/low connection will then provide perfect boundaries, but this is the exception and not common. Boundaries should delineate areas of dense trading, even if that means crossing some columnar price line or candle line.
In some cases, the daily chart price will Pierce the boundary sharply during the day and then randomly retrace into the pattern. This is what Messrs Edwards and McGee call the 'out-of-line movement' above. While burr moves pose a degree of challenge to trading, history suggests they are just a one - or two-day annoyance. There is no need to redraw the morphological boundaries to accommodate this situation.
Back to the test
My experience over the years is that the best deals break out cleanly, quickly and directly, and never look back. In fact, I think my trading performance would have been better if I had been able to close out losses at the end of the day. I want to do that to get that kind of performance. Often, however, a breakout is followed by a retrace and testing of the original pattern boundary for several days or a week, leading to hesitation in trading. This type of retest is normal, and as long as the retest does not challenge the ice line, traders should not worry.
Is it wiser not to take a position immediately on a pattern break and wait for a price retest to take a position? My answer is "no". Let's think about this logically. By not getting in on a breakout, traders are missing out on trades that move cleanly in the direction of the breakout, which happen to be the best opportunities. Backtested markets are more likely to fail than non-backtested markets.
Stop: target price
One caveat: there is no guarantee that any market will reach its target. Traders should be alert that the market may run out of steam before reaching its target.
More time
As a trader, I have mixed feelings about the relay pattern, depending on how long it lasts in a major trend run. Long trend pauses (say, three or four weeks) may wear out my patience. I prefer to see shorter breaks in major trends, especially when the entry breaks are stronger and form a pennant shape.
Futures Sniper: 21 Weeks of Trading Winners
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