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RIDE THE TIDE
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Let's say you enter a trade based on the techniques covered so far. You enter a long position intending it to be a day trade. However, the market performs extremely well, closing sharply higher by the 5 P . M . (EST) close

What do you do? If you are only in one lot position, stick to your plan, or place a hard stop beneath a reactionary low, or simply get out. If you have multiple lot positions on, take profits on a portion, and let the balance ride, placing stops at your break-even level or slightly higher, specifically if you have substantial profits built into the trade. This way, you can afford to ride the tide in case the market goes into a hyperbolic bullish trending mode. But if the market has been in a bullish trend, then you need to adjust your strategy and anticipate that the market might go into either a congestion phase or a trend reversal mode. This is where a trader really wants to apply the trading rules that state that you ignore buy signals at resistance and in stead look to take sell signals at resistance. If you are day trading, as soon as a setup occurs and you enter a trade, using the methods discussed so far, you should be able to determine a loss strategy such as placing either a hard-stop or a mental-stop close only above a session's high (more on this later). My exit strategy for taking a profit can be figured in one of two ways:

(1) I can use the predicted pivot point support target, or (2) if the trade does move in the desired direction, I can exit at the end of the trading session, which concludes at 5 P . M . (EST). If it is a Friday and you do not want to hold positions over the weekend, then your exit strategy would be to exit the trade before the close.

If the market has been trading on average in a wide range of 98 PIPs, as Table 2.1 showed, you can use that information to your advantage by ex pecting at least a 59-PIP profit target or more. Let me demonstrate as we re view my theories as shown in the chart in Figure 2.29. This is a 15-minute chart from the trading session on August 10, 2006 . As you can see, the mar ket trades near to the predicted pivot resistance level, where if you practice patience and wait for a trigger to develop, which in this case we are look ing for a sell signal at resistance, you would have been handsomely re warded. Once the signal is generated, place a stop above the high. From the entry to sell at 1.2877 to the stop-loss placement at 1.2913, this translates to a 36-PIP risk factor. The first profit target would be 59 PIPs lower than your entry at 1.2877, that is, 1.2818; and the second profit target would be set at the predicted pivot point support target at 1.2779. That would give a trader a 98-PIP profit objective. As it turns out, this trade went profitable from the get-go. If you implemented a trailing stop from the initial 129.13 risk level down to your entry price at breakeven, you took absolutely no heat on this trade. This system of combining pivot points with the pivot point moving average will help keep you on the right side of the market and hopefully let you accrue consistent profits.

The methodology just discussed can be programmed in most software. The method is extremely robust and can be improved with just a few sim ple discretionary inputs, such as take sell signals at resistance, ignore the buy signals when they are generated near resistance, only take buy signals

at or near support, and ignore sell signals. Use the predicted support and re sistance levels as profit-setting targets; and, most important of all, wait for the signal to trigger—do not anticipate a signal. This system works across various time periods and under different conditions, such as bullish, bear ish, or neutral. This gives it a high rating for being a very robust methodology. As I stated earlier, the parameters I use in this book are a variation of what is programmed in my proprietary library with Genesis software. This is a system that generates buy and sell signals based on the principles we have gone over so far. The greatest feature with this software is that it high lights a sell signal with a red triangle pointing down, and it signals when the trigger occurs to buy with a green triangle pointing up. These signals coincide against resistance levels to sell and support levels to buy. As you will see in many of the charts in this book, when the arrow indicators line up against pivot point support and resistance numbers, it offers a fantastic visual trade confirmation, based on solid technical analysis theory using pre defined strategies. It is a system like this that can definitely help traders stay focused and can help reduce the destructive emotional element of fear that forces traders out of winning trades too soon and the greed that gen erally gets traders to buy the top of rallies. These indicators help traders de velop patience by waiting for the actual signals to generate, rather than acting on anticipation. These signals and methods covered in this book can

be applied with most charting packages. In fact, 26 years ago, I was calcu lating the pivot point support and resistance numbers with a hand-held calculator; and I was not using candle patterns, which show depth and breadth of the current market condition in a colorful manner versus onedimensional single-colored bar charts that we used in those days.

One of the neat things about this book is that it comes complete with your own pivot point and Fibonacci calculators. All that needs to be done is to input the data for the high, the low, and the close; and you will have R 3 down to the S-3 numbers calculated for you. It is very easy to use; all you need are the prices for the forex market for the time frame you wish to re search, such as the daily, the weekly, the monthly, or even a quarterly time period.

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