Home › Forums › Trading Systems Discussion › Nature of Markets – Power of Probability, Compounding & 1pip › Reply To: Nature of Markets – Power of Probability, Compounding & 1pip
“…It is a very well proven and accepted principle of trading that volume confirms a trend.
There are many ways to define a move, such as a change in momentum, expansion of the range, the divergence of two moving averages, the RSI crossing through the 50% level, or even standard deviations.
However, let us take the simplest definition of a trend, being that of a new high or low.
We know that the lowest volume time of day is the New York close, or 10pm in London and highest volume is between 1pm and 4pm. Therefore, if we consider the New York close to be the end of one trading day and the beginning of the next, we can apply a simple trading rule:
Buy if the market makes a new high, or sell if it makes a new low, between 1pm and 4pm.
This method better complies with the RZ thus highly reduce DD. Use it with the 1 pip profit method of this thread subject (with trailing), or to be sure that you are trading with the “Elephants” and not against them.
You already have the (old) tools to use it in the (dead) “Killing Zone” thread @FF.