{"id":18159,"date":"2011-01-17T02:02:18","date_gmt":"2011-01-17T07:02:18","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=18159"},"modified":"2011-01-17T02:02:18","modified_gmt":"2011-01-17T07:02:18","slug":"combining-taylor-trading-method-value-area-trading-and-trade-triggers-to-verify-winning-trades","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/01\/17\/combining-taylor-trading-method-value-area-trading-and-trade-triggers-to-verify-winning-trades\/","title":{"rendered":"Combining Taylor Trading Method, Value Area Trading, and Trade Triggers to Verify Winning Trades"},"content":{"rendered":"

By Bob Moore<\/strong><\/p>\n

Successful traders are constantly searching for the ‘perfect’ set-up to win a trade. One such opportunity happened on Friday, January 7, 2011. And all the better, the opportunity can be replicated by trading instrument of choice and occurs time-and-time again.<\/p>\n

Of course, to have the impetus to timely act on a trade, the trader needs to verify the opportunity by considering multiple vantage points. By combining the principals of Taylor Trading Method with Value Area Trading and overlapping Trade Triggers Buy\/Sell signals, the trader can consider multiple vantage points to quickly and reliably conclude if the trade presenting itself is a worthwhile trade to act upon.<\/p>\n

Even though the ETF, SPY (which is managed to replicate the S&P 500), has been used to describe the intricacies of Friday’s trade, many trading instruments could have been substituted in the SPY’s place to take advantage of the same trade.<\/p>\n

The trading opportunity that occurred on Friday, January 7th actually started to develop on Thursday, January 6th. Thursday was a Taylor Trading Method Buy Day. According to Taylor Trading Rules, the Buy Day is the first day of the Taylor Trading 3-day cycle in which lows for the cycle are to be established.<\/p>\n

On Thursday, SPY, along with many other trading instruments, opened above its close the day before gyrating above and below its Value Area (VA) High. (The Value Area of an instrument is unique for each trading day and is the price range in which 70% of the instrument’s trading volume took place the day before.) The SPY traded above its VA High at 10:30 US EST verifying that SPY traded a sufficient amount of time above its designated VA.<\/p>\n

Then, Market sentiment began to change abruptly in which the SPY traded below its VA High at 11:00 and 11:30 US EST \u00bd-hr Bars triggering VA 80% Rule to the downside. (According to VA Rule, if a trading instrument declines below its VA High for (2) consecutive \u00bd-hr Bars then there is an 80% chance it will decline at least to its VA Low by close of next trading day.) In addition to the VA Rule being triggered, the Taylor Trading Method Buy Day Low was established between 11:00 and 11:30 US EST at a level of 127.01.<\/p>\n

The rest of the day was non-eventful with the SPY trading within its VA and churning a slight recovery from the late morning decline. It is the non-eventful afternoon, however, that cued the trader to consider his\/her trading opportunities for the next day:<\/p>\n

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