On the chart, the market has formed a narrow horizontal channel at the beginning of a trading day and during the Asian session. Then, it broke the upper border of the channel, creating the opportunity to use Box 19.2 and to enter the market in the direction of the break for a quick and rela­tively moderate profit. For a more conservative trader who did not want the risk of entering the market with the position where the profit should be taken fast, there was another opportunity to enter the market. In accordance with another trading scheme (see Box 18.3), you can enter the market because it was moving in just one direction from the open price. If this trading opportunity was also considered an inappropriate one at the mo­ment, another trading opportunity would arise soon. Entering the market on the break of the low of the previous range was recommended in accordance with four (!) other different templates, Box 19.1, Box 18.2, Box 20.4, and even Box 18.1.

FIGURE 21.1

Then, the journey began, confirming several other thoughts and ideas described in the book.

First of all, on the way down, the market has formed at least three flat bottoms, and each of them was a clue for a trader that the move in this di­rection most likely would continue.

Second, as you can see, the idea of never opening a position against the main move of the day has also been confirmed, because the bottom pickers most likely were wiped out from the market by its powerful move. Because no major support or trendline was on the market's way during this day, a trade against the main move of the day would never pay off. It is important to remember that under similar circumstances it is usually very difficult (even close to impossible) to choose the right moment when the market may turn to the opposite direction. If you missed all the previous trading signals and opportunities, it would be better to stay away from the market, waiting for another trading day, than to take chances on picking a bottom without having a trading signal in favor of such an attempt.

Third, it is not really important where a position was entered and profit was actually taken. In any case, if during that day the trading strategy has been chosen in accordance with one or another template, the profit was unavoidable and would have ranged from 70 to 80 pips and up to a couple of hundred pips. However, the real importance of the example is the fact that this particular trading day can be considered as typical for the market. Its behavioral pattern was a common one and seen frequently (with some unimportant variations, of course). Using the templates provides a perfect opportunity to trade with no stress, and without the necessity of predicting the future or making forecasts in advance. A simple reaction in accordance with trading signals and basic techniques described in trading templates would do the job perfectly and would give a trader a great advantage against any other way of trading.

Smarter trading The art of day trading Trading Chaos Sane Investing In An Insane World