Wednesday, February 4, 2009

How to trade the magic numbers

This post is for people who do not understand the best way to trade my magic numbers, an attempt I am making and hope you understand.

On a daily basis I will be giving 5 magic numbers ascending order..Lets call them M1, M2,M3,M4 & M5 respectively. Each of these levels are important supports and resistances, I would not expect the mkts to fall below M1(hence safest place to initiate a long with SL 5 points below M1) and would not expect mkts to go above M5 (safest place to short with SL 5 points above M5 ). These trades should be 90% accurate on normal days. Targets are M2 for longs and M4 for shorts respectively however if the difference between the two levels is more than 40 points I usually book around 25-30 points and wait for next opportunity

Similarly M2, M3 & M4 can be played on both sides with 10 point SL for 70-80% accuracy. However I personally do not start trading on on magic levels in first 20-30 minutes to let the overnight noise die down.

Cheers
SH

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