tactical trader

Trading is the most deceptive profession in the world. A person cannot walk into an airport, jump into a 747, and take off down the runway without any prior training. Yet people will routinely open an account and start trading without any guidance whatsoever. For me, the biggest difference in my trading occurred when I learned to ignore my brain and just focus on a handful of good setups.

Once I learned the setups, the next challenge was to have the discipline to follow them the same way, each and every time. No thinking, no hemming, no hawing. I did this by recording my trading activity and grading myself on how well I executed each setup…instead of how much money I was making or losing. Whereas focusing on the P&L automatically encourages the bad habits that plague many traders, a setup-based approach encourages habits that can push a trader into the realm of consistent profitability.

Which setups do I like? Although I spend a large amount of my trading day focused on the Emini S&Ps and the Mini-Sized Dow, there are plenty of times when these indices are dead in the water. On days when the indices are trading in a narrow range, I look to the currencies for my next setup. My two favourite setups in the currencies are what I call the Box Play and Squeeze Play. I execute these primarily on the EURUSD, but they work on all currency pairs. Let’s take a look.

I like to focus part of my trading day on scalp plays, where I’m jumping in and out of the market with a little piece here, and a little piece there. However, I also like to focus a part of my time on catching potentially bigger intraday moves, as well as multi-day and multi-week moves. What I’ll do is focus on scalp plays in one account, and use a second account for swing plays. The Box Play and Squeeze Play are diverse setups that can be used for both scalp plays and swing trades. For intraday trades, I use 5 and 15 minute charts. For swing trades I use 60 minute and daily charts.

Box Plays: Measuring the move before it occurs…