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Trading with Expectation/Expected Value – Part 3b: What Price Behavior Shall We Trade?

by Osikani 3 Comments

In the last part of this series of posts, we said that we needed to find some repeatable, measurable, price activity to create a trading method with which to tackle the market. How do we go about this? To put it succinctly, by looking at a historical chart. So let us examine a chart. We shall in this instance look at a 15m chart of /NQ, the E-mini NASDAQ 100 Futures. Why the /NQ? Because its behavior suits what we want to show. There are many other instruments that will be suitable for our method, but we have to start somewhere.

Before you watch the video, why not bring up a historical chart of the /NQ. Scroll though it.

  • Do you notice anything about what happens when price breaks the high of the previous bar?
  • Do you notice that price seems to break the high, and then whether it goes on or retreats, it rarely breaks the low of that previous bar?
  • What about when the low of the previous bar is broken?
  • Do you notice that price seems to break the low, and then whether it goes on or retreats, it rarely breaks the high of that previous bar?

Is what we think that we are seeing really true, and can we possibly craft some method that takes advantage of what we seem to be observing?

Trading with Expectation/Expected Value – Part 3b: What Price Behavior Shall We Trade?

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Posted in: Bars, Chart, Price Action, Statistics, Trading Methods Tagged: breakdown, breakout, engulf, inside bar, outside bar
← Trading with Expectation/Expected Value – Part 3a: Find the Target before you enter the trade
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