Markets are 100% about probabilities, there is zero certainty. Please accept this. Do not even look for certainty. Accepting this is a big step forward. I can repeat this and repeat this, but most people will never have this perspective on markets, and they will never succeed either.
Market movements are a process. Market bottoms and tops are a process. Trends in between are a process. These processes are the CONDITIONS which we should be using to develop trade setups from. Trade setups are a process. Trade setups are themselves setup by certain conditions. All of this is the basis for every single trade setup development – every one. I have my own trade setups, they are mine, I worked on them struggled for years. You’ll never really understand how to exactly implement my method. But that is fine, I will never understand how to exactly implement anyone else’s method. But that does not mean that studying another good trader’s methods won’t be helpful. I basically studied several different methods to cobble together my own ways of doing this. I feel totally comfortable with it. That is where everyone needs to be, and then believe in it also.
Runner stocks, and the recognition of the concept, are the conditions from which we can form trade setups. I have discussed this over and over about runner stocks, and using very small stocks as the initial examples. Most people are ignoring this. Big mistake, they are easiest to see with the small stocks, even if you don’t trade them. I do not understand the lack of effort out there.
I have expanded this concept to different stocks, time-frames, even markets themselves. One of the subscribers who is working hard at this did a great job of recognizing that on 3/28 the USDJPY was itself a “runner stock”. He recognized the initial accum as the setup, then the breakout with volume, the trend absorption, the reaccum, the upper level absorption there, then the next breakout, the trend absorption, the trend absorption. And what is the final arrow to me, as I was watching it. That final arrow is a change of character, and in this context, time for at least a pause, and if you are using this as the basis of your trading, time for taking some or all profits, and moving up stops. And this change of character outcome can be seen in the second chart. I am using a 1 minute chart, so keep that in context please. Study these charts:
Hi Scott, is the change in character you mention due primarily to the increase in selling volume red bars, or is there more?
Dave a lot of stuff I do in this business at this point is seeing things so many times and just eyeballing it. The volume not that big, but just the volatility coming in there, it was different in relation to that whole run up on Wednesday, a change. Hard to quantify really. And in context of that 1 minute chart, it seemed like it would be a place to get antsy about being long via that context. Try to keep all of this in context of trade setups and exit strategies whenever doing the work.
And then putting all of this in context of runner stocks – like DBX today, TNDM over a few days, or GERN recently. Runners.