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Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading by David Halsey

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CHAPTER 3

Drawing a Road Map

Finding Direction

A career in trading can be seen as one long journey made up of a series of shorter journeys. And what are journeys without maps? Ultimately, they are journeys that most likely will not reach their desired destinations. We'll discuss personal attributes and attitudes that can lead traders to profitable destinations over the long haul. In this chapter, we'll look at maps to be used for the innumerable journeys within that much longer one. Let's hit the road and get started.

Successful traders make their way through markets by identifying trends, continuations of trends, and trend failures. Charts provide indications—clues—about the underlying road map being traveled by a given market. At any moment, the road taken by that market in the past is clearly visible. The right edge of the map leading to the future, however, is not clear at all. In fact, it is invisible. It is your job as a trader to analyze the road taken by your market thus far and to plot your own course on the road that lies ahead. Even though this might seem like driving blindly into the future, it isn't really, if you do your job well. By studying and analyzing the road behind you, you can develop strategies and tactics for navigating the future with confidence.

A Mountain Range of Price

A picture's worth a thousand words, right? We've all heard that a thousand times. In trading, as in many other areas, it's true. Our charts paint pictorial records of where markets ...

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