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    Key Reference Areas Part 2 - Key Takeaways

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    mariano
    The world of sports psychology can often offer great insights that can be used to improve your trading. An excellent book that does just this is “Golf is Not A Game of Perfect” by Bob Rotella. It talks about how at the top levels of golf, everyone can hit the ball well and everyone is very skilled, but what separates the great from the good is their ability to handle adversity and all of the imperfections of the game.

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    Key Reference Areas Part 2 - Key Takeaways

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    mariano
    65 views1 page
    The world of sports psychology can often offer great insights that can be used to improve your trading. An excellent book that does just this is “Golf is Not A Game of Perfect” by Bob Rotella. It talks about how at the top levels of golf, everyone can hit the ball well and everyone is very skilled, but what separates the great from the good is their ability to handle adversity and all of the imperfections of the game.

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    The world of sports psychology can often offer great insights that can be used to improve your trading. An excellent book that does just this is “Golf is Not A Game of Perfect” by Bob Rotella. It talks about how at the top levels of golf, everyone can hit the ball well and everyone is very skilled, but what separates the great from the good is their ability to handle adversity and all of the imperfections of the game.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    65 views1 page

    Key Reference Areas Part 2 - Key Takeaways

    Uploaded by

    mariano
    The world of sports psychology can often offer great insights that can be used to improve your trading. An excellent book that does just this is “Golf is Not A Game of Perfect” by Bob Rotella. It talks about how at the top levels of golf, everyone can hit the ball well and everyone is very skilled, but what separates the great from the good is their ability to handle adversity and all of the imperfections of the game.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Reading the Market Using Key Reference Areas (Part 2)

    Key Takeaways
    • Look at the high volume node as a general area where the majority of the horizontal volume
    took place. It’s the “bulge” on the market profile graphic. Never try to be too precise with exact
    single prices – the markets are too complex for that.

    • This key reference area can give you great information about who is in control of the market,
    while also often acting as either support (when we test it from above), or resistance (when we
    test it from below). In the majority of the cases, expect some sort of price reaction there.

    • When we get a move away from a high volume node on any given time-frame, the retest of
    this key reference area will give us great information. In the case of retesting it from below (i.e.
    the original move away from it was to the downside), if we reject it quickly, the odds are good
    that sellers are still in control and that prices will go further down. If we fly higher right through
    it, this is great information that the odds are good that there has been a major change in
    control and now buyers will likely keep taking it higher. And if we just balance when we test it,
    then anything is possible, but the odds are still higher (statistically) that it gets rejected and
    prices eventually go back down, most likely due to the fact that many previous buyers in this
    area are now at a loss in their position and as they sell, they cause prices to move lower. In the
    case of retesting the area from above, simply reverse the scenarios and conclusions.

    • Once we’ve made moves to both sides of a high volume node, and moved a significant distance
    away, that high volume node becomes invalidated as a key reference area. We say a
    ‘significant’ distance because if price moves just slightly beyond it on both sides, it’s likely that
    this isn’t actually a breakout move away from the balance, but rather a widening of it. i.e. the
    market is still balancing but extending the area over which it’s building horizontal volume. This
    is a judgment call and with experience you can become more adept at it. This applies to all
    reference areas.

    • The larger the high volume node (i.e. the more time it spans) the more important it is as an
    area going forward. If you’re looking at the previous day’s high volume node as a key reference
    area, it will only be important over the next several days. However, a high volume node formed
    as part of a 2 week balance can remain important for months.

    Copyright © 2012 OpenTrader Training, LLC. All rights reserved.

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