I want to quickly cover off on one of my favorite price formations on the charts. Simply put, I love trading floors that form on charts.
Why?
Well, trading floors capture the essence of buying low. You know, the buy lower and sell higher thing. Plus, they tell us when longs are buying and shorts are covering. And that is a key to understanding when tuning out the noise and measuring risk.
People tend to become disinterested in a stock when trading floors are developing and pretty much give up by the time they start to work. Traders can use this psychology as an added edge.
And frankly, they just fit my trading style. They form on any time frame but here’s a chart showing a trading floor that developed on the US Dollar… and below that are a few more insights on trading floors.
What’s awesome about trading floors?
- You know where you are wrong.
- Where you’re wrong is close by.
- Similar principles work on nearly all time frames.
- They often form after a long term false breakdown.
What stinks about trading floors?
- They can be temporary or closer to permanent.
- It’s hard to know when they will hold.
- You never know how long they will consolidate.
Thanks for reading and best of luck out there.
Twitter: @ATMcharts
Read more from Aaron on his blog.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
