We left yesterday’s post at 9:45 (yellow line) with the expectation for a surge up to the EUR TRAK upper channel band . . which was subsequently hit at 11:30. Also note that yesterday’s TRAK held overnight and is still in effect this morning as price ping pongs between the old TRAK upper band and the Ledge. Pretty amazing technically speaking . . or as my friends at UBS say. “The second mouse gets the cheeseâ€.
That aphorism relates perfectly to the Little Dipper setup, which looks a lot like the original Dipper but is designed to capture just the sweet spot of the trade. The rules are simple: we look at the trend, parabolics and 8/8 hi lo channel from 3:00 to 4:00 and then enter in the defined direction with a time stop at 5:00 to exit 1/2 of the position and another time stop at 7:00 to exit the other half. We also use the Dipper’s 15 pip trailing stop to help preserve our capital. In many cases the initial 5:00 exit provides a nice cushion and an essentially risk free trade heading towards the typically more volatile 5:00 – 7:00 time frame. Remember . . these are Chicago based times. Many brokers don’t permit the Dipper type of time-based entry and exit . . IB is one that does have this robust feature. More about time based trading tomorrow.
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