My Trading Signals Explained - Updated 05/08/17 - Added Signal Support & Resistance

Many of you probably read this Blog and wonder, What the heck is he doing?

Below is an attempt to explain the signals I use, enjoy.

If you have any questions let me know.















Trades Signals
Signal Type
Long Signal Name
Long Signal Acronym
Short Signal Name
Short Signal Acronym
Continuation Trades
Continuation Trade – Long
Cont-L
Continuation Trade – Short
Cont-S
Trend Correction Trades
Rally off higher short-term Low – Long
HI’r-LO’s
Decline off lower short-term High – Short
LO’r-HI’s
W Trades
W Bottom – Long
W-BTM
W Top – Short
W-TOP
Support & Resistance
1st Up off Support – Long
1st UP Off SUP
1st Down off Resistance – Short
1st DWN off RES
1st 2 in a Row Trades
1st 2 in a Row Up – Long
1st 2 UP
1st 2 in a Row Down – Short
1st 2 DWN
Consolidation Trades
Consolidation Break Out – Long
Cons-BO
Consolidation Break Down – Short
Cons-BD

The Naked Close Indicator
The key technical indicator that I use in the conjunction with all these signals is the Naked Close.
There are two types of Naked Close indicators, a Naked Close Long and a Naked Close Short.
The Naked Close Long, shown below, occurs when the close of a bar is higher than the high of the previous bar.
The Naked Close Short, shown below, occurs when the close of a bar is lower than the low of the previous bar.

                                             

Continuation Trades – Definition
Continuation Trades, whether Long or Short occur after a short-term trend change has been initiated by another signal such as a 1st 2 in a Row or a W pattern.
The signal indicates a continuation of the movement by the appearance of consecutive Naked Close signals on subsequent bars.
There should be less than 1 bar between signals to maintain the continuation movement.



Trend Correction Trades – Definition
These signals normally occur during persistent trends when the market makes a series of small corrections against the trend then moves to continue the trend.
This is a common market structure forming rising bottoms in an up trend and falling tops in a down trend.
The Long signal, Rally off higher short term Low, provides method of buying into strength.
The Short signal, Decline off lower short-term High, provides a method of selling into weakness.



W Trades – Definition
The W formation of market structure can also be called;
-        Double Top, Double Bottom
-        Double test of resistance, Double test of support
The Long signal structure is a W formation at a support level.
Our entry point is the first Naked Close signal coming off the second test of support.
The Short signal structure is an inverted W formation at a resistance level.
Our entry point is the first Naked Close signal coming off the second test of resistance.
Support & Resistance Trades – Definition

Occurs at recurring support and resistance levels that set up in the trading activity. 
These can be similar to W Trades in some cases. 
However, Support & Resistance levels can set up at mid-range trading points were as W’s normally form at major high and low turning points.
1st 2 in a Row Trades – Definition
The 1st 2 in a Row signal is an indication of potential trend reversal and normally occurs after a persistent trend.
The signal consists of 2 naked close signals in a row as the market moves in the opposite direction of the previous trend.




Consolidation Trades – Definition
Periods of consolidation occur at various points in the market structure;
-        At a pause in a trend, trend consolidation
-        At a Support or Resistance level
A break from consolidation can indicate the continuation or start of a move in the direction of the break.
A trend consolidation should be approximately 3 bars with roughly the same top and bottom that occurs after the trend has developed and is not close to a strong support or resistance level. A break in the direction of the trend generally indicates a continuation of the trend.
Consolidations at Support or Resistance can be greater than 3 bars. Longer consolidation periods can result in strong moves from the break.
However, be aware of false breaks and be prepared for a re-test of the break out level.



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