More About Using Context In Your Simple Trading - Part II

"You cannot afford to wait for perfect conditions. Goal setting is often a matter of balancing timing against available resources. Opportunities are easily lost while waiting for perfect conditions."
--Gary Ryan Blair


Over the years I’ve taught and/or guided a number of traders through interactions with the market.  Moreover, I’ve spent a lot of time trying to drill the idea that the specific single prices and/or readings of a given technical indicator, a high or a low matter not at all without taking into account other relevant prices, their proximity, the direction of prices and the force of a move.

What do all of these terms mean?

If you’ve been involved in the markets for awhile, you likely already know.  If you’re new, you likely don’t understand them, but not to worry… keep coming back and you’ll learn the meaning of these terms [and more] over time.

At any rate… As chartists, we depend on information generated by whatever market we trade to guide our decisions.  Whether we trade the minute, day or weekly chart, we tend to focus on a very narrow view of the market, because we’re attempting to profit from short-term price fluctuations. By doing this, we can ignore other factors that might have a major effect on short-term price action.

What’s more?  Context applies in almost every area of performance.  

Fundamental traders use context to make decisions about the value of a stock and the potential profit of buying a security in light of that value.

A batter at the plate in a baseball game with context of a Full Count and bases loaded is more likely to swing at an errant pitch than a batter just stepping up to the plate.

A stock that’s just established an up trend that pulls back into a value zone and gives you a buy signal is much more likely to have a profitable near-term outcome if purchased than a stock purchased closer to resistance.

Below you’ll find a follow-up video to my first post about trading context.

Do you agree that trading context is 1 of the most important components of any strategy or do you do just fine without it? Let me know below...