The concept of "Still in Effect" is one worth reflecting on. Sometimes you get a signal on a chart and you may have exited the trade but the action may still be in effect. In these cases, the market may go higher or lower with the original signal and you may be re entering without a current signal. This occurs in cases where you are still trading inside the range in which the original signal was generated. Some examples follow... Note: This article may touch on some more advanced concepts we use in the room, but the principal is of value for any trader in any market (as do the concepts we use to trade) . Consider the benefits of the Oil Trading Room and how the concepts and chart in this article consistently capture the movement of the market. We look froward to seeing you in the room!
Typically, when the market is moving, you won't see this so much, but if you are trading where the market is in consolidation or during times of the day where it is just not moving, you can get a signal and the market will flop around in a range but will never have violated the original set up conditions. Now, following this you might get continuation from this original trade situation, but you may have exited the trade after it crossed your entry for the 5th time, if for no other reason than it was just too frustrating to hang with it (after all, it is good to preserve your mental energy for when opportunity is highest).
Before looking at the chart, what are the conditions where this might occur? Well first off, we can recall the room's 5 tick rule. We allow a one bar violation of the pattern. Aside from that, we want to trade in sequences of higher highs and lows (preferably at the key points where risk is the lowest such as various kinds of pivot retags).
Another thing that might have taken me out of the trade, could have done so where the trade signal is still in effect. What is an example of this? Where the Smart Super Trend (SST) gets tagged, but the pattern of higher highs and lows is still in effect. This is why I often point out the SST is best utilized in a trend and where it is moving. Otherwise, it makes what the room calls an SST sandwich, which can be an excellent breakout zone and there are a whole variety of patterns we can use to benefit from this kind of patterning.
Each of the green arrows on the chart below is associated with a situation where "Still in Effect" comes in to play. Can you see them? How might your trading be different if you were to try to stay in line with the cycles on the chart?
Please share your observations and questions with the room!