Home-Page . . MSB Index Page . . Learning Zone . . Books Page . . Previous Page . . Bottom of This Page . . Next Page . . Send Feedback


Market Skill-Builder
Financial Markets & Financial Software The Skill-Builder for Financial Trading - Financial Training Software.

Distinguishing Reversals from Corrections (1)
Impulse Vs. Drift

The answer is that we watch for and act upon two separate types of event: :

1) We watch the action of the market (concentrating on the short-term price-chart) for signs of significant changes in momentum and volatility.

1a) as evidenced by the alternation between "Impulsive" and "drifting" price-action:

Inpulse vs. Drift
Drift Note that "Drifting" action can take more complex forms, as on the left where two brief periods of down-drift are separated by a sharp up-period. The principle remains the same and this pattern is bullish.

(In market parlance "Bullish" = likely to go up, "Bearish" = likely to go down)

Positions taken "against the drift" (in either direction) should be protected by stops at a level above or below the market which would represent a re-acceleration of the market in the same direction as the drift, two examples:

Drift Buy / Sell / Stops

Next,Volatility Expansion. Go there
Home-Page . . MSB Index Page . . Learning Zone . . Books Page . . Previous Page . . Top of This Page . . Send Feedback
Financial Markets & Financial Software. The Skill-Builder for Financial Trading - Financial Training Software.