Trend Trading Set-Ups: Entering and Exiting Trends for Maximum Profit

CHAPTER 6

Sideways Range Trades

Each of the preceding chapters was, in a way, simply the preparation for the actual trade set-ups. Although an oversimplification, there are nevertheless basically two ways to trade. A market participant trades either breakouts or retraces, which happens to demarcate most traders because one typically falls into one camp or the other.

For all trade set-ups, the basic data that is always available and at the market participant's disposal are price, volume, and time. From this basic data the market participant creates information. Over the years, the information created from these basic elements ranges from the simple to the complex. This book argues to keep it simple. In terms of derived information, it strongly suggests that all a market participant truly requires to trade profitably are qualified trends and anchored support and resistance bars and zones. There are a few additional technical constructs utilized during trading, but they are not actually derived information but instead existing data elements such as price magnets, two bar reversals, and AB = CD constructs. Each of these constructs was identified and explained in Trend Qualification and Trading,1 and though I am not the originator of the concepts, I find value in their use. In the trade set-ups that follow, their existence is pointed out where useful and applicable.

By adding in the notion of time, additional information is possible as demonstrated through the probability matrixes ...