balance area

- balance is one of the most important concepts we deal with because it represents the potential for change to take place. Change is were a trader has opportunity; without change there is no opportunity.

- when we are at balance extremes, depending which side of the position is taken, we have high risk or great opportunity. Balance area extremes present potentially asymmetric trading opportunities; we want to be ready to act.

• today, 28.09.2010, was a very good example, we moved out of the balance area formed ON, an aggressive entry could be the POC of the balance area; or waiting for confirmation, the bottom of the balance area, but under any circumstance don't fade the move from POC

- possible scenarios to consider for playing the balance areas:

1. stays in range or extends range slightly
2. looks outside the range, gathers stops, and fails; comes back inside the breakout level followed by a downside/upside counter auction back into the range
3. looks above/below breakout level and goes

- trading the balance area illustrates 3 important concepts for long-term trading success:

1. understanding balance, recognizing it, and leveraging it in my trading strategy formulation
2. the importance of a bigger picture market perspective in formulating my day timeframe strategy
3. understanding the magnitude of the opportunity and using my imagination to visualize the possibilities

Balance is everywhere!!!

As a final comment, beyond the concept of balance, this disccussion also illustrates how powerful it is to view markets with a top down, bigger picture perspective. A broader market perspective keeps us from getting chopped up at crucial levels and also enables us to see trade potential in terms of risk as well as reward.