The Veteran Floor Trader Method

I found this method described on trading-naked web site and free distributed in this article.

The system was originally created for position trading.

This method is a retracement-continuation trade with the trend.

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Tools

9/18 period Moving Average to identify the trend.

Rally / Decline retracements

Here is description of retracement as is used in "The Veteran Floor Trader Method".

Trend confirmed by 9 & 18 MA is:

• Up when price > 9 MA > 18 MA
• Down when price <>

Rally retracement in down trend

Price forms a rally in an down trend when bar has higher lows than previous bar.

Looking to sell on break down on the previous bar low (marked by X).

• In the ideal situation there will be 2 to 5 bars before break down.
• Bars in retracement will be smaller or equal in range.
• Bars with large range are less reliable.

Decline retracement in up trend

Price forms a decline in an up trend when bar has lower high than previous bar.
Looking to buy on previous bar high break up (marked by X).

• In the ideal situation there will be 2 to 5 bars before break up.
• Bars in retracement will be smaller or equal in range.
  
• Bars with large range are less reliable.
  

Exceptions

In high volatility retracement could be formed by 1 only bar.

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Buy Signals

1. Price is (significantly) above 9 MA for at least 2 bars
2. 9 MA is above 18 MA
3. One or both 9/18 MA slope is/are up
4. There are few bars with lower highs. One or more bars touch or penetrate 18 MA line.

One the above is fact look for break up the previous bar high to place am long order.

Sell Signals

1. Price is (significantly) below 9 MA for at least 2 bars.

2. 9 MA is below 18 MA
3. One or both 9/18 MA slope is/are up
4. There are few bars with higher lows. One or more bars touch or penetrate 18 MA line.

One the above is fact look for break up the previous bar high to place am long order.