Some final thoughts:
a. a big key to BTTT is "divergence", or a difference in momentum between price and its oscillator (stochastics or ROC). When price hits a lower low/higher high but the oscillator does not = strong sign of reversal. When rallies/corrections are lower/higher than previous ones, but the oscillators are higher/lower than previous rises/dips = strong sign of continuation.
b. For uptrends, it is the highs that count most, not the lows. For downtrends, it is the lows that count, not the highs. But ideally both highs and lows should be in line with the trend so that parallel channel lines can be drawn.
c. How you use stops must be fitted to your own style and tolerance. If you don't mind a high percentage of small losing trades, keep tight stops. For me, I prefer to win at least 60% of my trades, so I use looser stops. But to compensate I often move the stops intraday when price moves favorably. I haven't tried it, but using parabolic stops may work very well with BTTT, especially in strong trends.
d. The BTTT system works well in all time frames. If you are a daytrader, try applying it to 15-minute or even 5-minute charts. I have successfully used hourly charts (which I prefer, and often consult). Longer term traders might want to use weekly charts (you'll need a bigger stop...15% to 20% perhaps).
e. BTTT can work with smallcap issues, as many of our recent trades show. But generally, my experience is that in the long run, the most consistent returns will be in the liquid large cap issues, which tend to show more uniform price action.
e. Above all: NEVER TRADE AGAINST THE PRESENT TREND!!
Good luck to all...and now, back to the beer and BAR-B-Q!!
Until Tuesday, TC. |
