Commodity Futures Trading Using Fuzzy Logic And Market Synchronization Clues, Part 1
There's nothing better than fuzzy logic for determining when a commodity market has begun a new trend and is starting to synchronize. Read on to find out exactly what this is all about...
Observation From Trading Notes:
"After a big spike OUT of the 5-minute e-mini futures channel, do not expect a continuation after a correction MOST of the time. Odds favor a chop or even a correction to the bottom of major support. Look for a correction to the bottom of the 5-minute channel."
For all practical purposes, the move is over when the e-mini futures breaks out of its channel. At least it is for that time frame. If you are convinced the bigger cycles have farther to go, then wait for a normal cycle of this time frame to end its correction. Sometimes it will even do a snuff down, but the correction remains shallow in price depth. That is a good buying sign.
The point is, if you are looking to get on board in the same direction as the channel break, be patient and let the e-mini market show its hand first. Study the correction to be sure it’s not turning into the beginning of a new bear swing down. If it is, then a short position may be warranted if the next larger cycle agrees. But always sell on rallies.
Observation:
"A system that works is to sell the 1-minute blue inner channel puncture with ticks flash. Cover on touch of bottom channel, big blue dot and tick flash. Repeat on rally."
This is a simple e-mini futures system I use for entry and exit when I know the main trend. Works like a charm. This is one of the few automated techniques I use. I may later publish the particulars of this method.
Observation:
"Watch and wait for the beginning of the e-mini market to get into a new sync. Volume, momentum, contract numbers and A-D (advance-decline line) all improving. Then buy the RARE contracts flash with ticks flash and sell the big blue dot into the upper channel. In other words, look for the sync, then play the trending game in that direction until it ends to reverse the other way with a new sync. You want to wait for a particular trending market to trade. The rest is noise and losses. Faster and safer profits this way. Most commodity traders chew up their money and patience with difficult markets."
This may sound cryptic. To explain it fully would require many pages and software code. But the idea is to be patient and wait for the e-mini futures market to start making clean, synchronized swings in a new direction. This is when most indicators, price and volatility move together. Look for more on this in my other articles. Once this synchronization starts, play the in and out trading game with the trend only. You should refuse to play when the indications are foggy. This is what separates the good traders from the poor. You don't have to be a perfect trader - just be better than most!
Part Two of Two Parts - Next!
There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used. By: Thomas Cathey Article Source: http://www.ArticleDashboard.com
Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his market forecast TimeLine Trading charts and get his complete 44+ lesson, "Thomas Commodity Trading Course - all free." www.thomascapitalmanagement.com/commodity/welcome.htm Main site: www.ThomasCapitalManagement.com
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