tactical trader

Technical analysis can be defined as the study of past price behaviour in an effort to determine patterns and trends that are believed to be predictable of the future. At the core of this school of thought is the assumption that human behaviour is repetitive in nature. We all recognize that, although human behaviour patterns may have recurrent tendencies, they do not normally express themselves in the same exact, mechanical manner each time. Even with this qualification in mind, technical analysis is capable of providing us with the ability to make price forecasts characterized with an improved probability of outcome. It can help us achieve the “edge” required in our pursuit of long-term consistent success.

A wide array of technical approaches is available. Some are better suited to particular personalities and styles of trading than others. This article will focus on just a few that I have found to be consistently helpful in interpreting intraday market behaviour and making short-term price forecasts.

My trading timeframe of choice is the intraday, primarily because it affords the greatest degree of immediate feedback. An important element for consistent success is the ability to quickly realize one’s mistakes. Intraday trading offers us a way to “have our finger on the button”, and ready to take quick evasive action should our market judgements prove incorrect. Technical analysis tells us what has happened on a fairly consistent basis in the past, but it makes absolutely no guarantees about the future.

Oscillator divergence/momentum confirmation

The nature of day trading requires that the futures trader make a constant assessment as to whether a market is in a trending or trading-range mode. If the mode is determined to be trading-range we need a convenient means of identifying short term reversal points. On the other hand, if the mode is assumed to be trending, we require a means of identifying:

1. an appropriate entry point based on the trend currently in force, and…