Tracking the zones like a Hunter!
Trading requires a lot of preparation work, the positive returns don't just come to us without this work, in fact it's just like hunting. A hunter doesn't go out into the woods and immediately find a deer to shoot. They have to track their prey over many areas of the woods until they locate them. Once they do they have to wait patiently for the deer to come closer to them until the time is right and when that time is right to pull the trigger, it's just like us finding an "Institutional Trade Signal"
Recently we spotted a trade signal zone that we knew was a zone the institutions would likely use to continue their buying on the $GBPCAD. We had been tracking their buying and selling for many weeks, waiting patiently for them to break out of their weekly range. I notified students of the range they had put price in on the weekly chart and I said that we would want to wait until they made their move and removed their own supply thus opening the passage for a move higher.
In the University Forum we have what we call an Observation Journal, this is where we keep track of the movements of the institutions and track the buying and selling they are doing in order to pinpoint the trade signals that will eventually follow. On December 6th I wrote in the $GBPCAD journal that price might start making a rally to break through weekly supply (an area where the banks had last filled in substantial sell orders) and when this area would be taken out, we would watch for the new buying zones for potential signals. Well the weekly supply was eventually removed and with that an Institutional Trade Signal was produced. Just like that deer coming into sight range and the hunter with his trigger finger ready to pull the trigger.
This is how trading is for us, calculated, well timed and with patience. The end result is a zone that was determined as a zone the banks would be buying from and so buy orders could be placed above this zone, with stop orders below and a conservative target roughly 4:1 move away. Have a look below at the long signal and take a look at how the draw down was very minimal with most of the move being to the upside and thus creating a profitable signal with very little time spent in the red.
Hope this gives you something to think about!
Magic Trader! ;)