Today's stock market indexes provide an excellent case study in observing waves of buying activity. These tiny waves are referred to as "bubbles" by Cahen in his book. Each time prices close below my moving average (in this case, the dotted white line is a Weighted Moving Average), then I will buy at the top of the next green candle that passes back above the moving average. I will then sell the odd-numbered contract as close to the apex of this wave as I can best estimate. I use the Bollinger Bands to assist me in this. My sole objective on the even-numbered contracts is to not lose money, since I'm holding them throught the downturn of the wave. Of course, when these waves of activity occur as in this example, I make just as much from the even-numbered contracts as I do from the odd-numbered ones. In this way, I am using the patterns that Cahen describes in this book, combined with Rules 1 & 2 described in Phantom's Gift, to accelerate my earnings. On a higher time frame, these waves create a pattern that Philippe Cahen refers to as a pattern of "parallels". This chart shows a photo-perfect example of this phenomenon of . Wow!Wednesday, July 16, 2008
Waves of Buying
Today's stock market indexes provide an excellent case study in observing waves of buying activity. These tiny waves are referred to as "bubbles" by Cahen in his book. Each time prices close below my moving average (in this case, the dotted white line is a Weighted Moving Average), then I will buy at the top of the next green candle that passes back above the moving average. I will then sell the odd-numbered contract as close to the apex of this wave as I can best estimate. I use the Bollinger Bands to assist me in this. My sole objective on the even-numbered contracts is to not lose money, since I'm holding them throught the downturn of the wave. Of course, when these waves of activity occur as in this example, I make just as much from the even-numbered contracts as I do from the odd-numbered ones. In this way, I am using the patterns that Cahen describes in this book, combined with Rules 1 & 2 described in Phantom's Gift, to accelerate my earnings. On a higher time frame, these waves create a pattern that Philippe Cahen refers to as a pattern of "parallels". This chart shows a photo-perfect example of this phenomenon of . Wow!
