What is a Scout Trade? (Updated): Sonicdeejay, in his own way and in a number of posts starting early in 2011, presented the concept of the SC or Scout trade. I suggest you read his posts directly, but here is a summary. Scout Before Classic Due to PA either ending a very strong directional run or repeatedly bumping at S or R, and in either situation there being very high current volume, the odds are increased for a reversal. Or, at least for a very nice pullback. This is a situation for a Scout, which is very much perception oriented. Sometimes a quick entry looks appropriate, but that involves a counter-trend entry in the midst of trend momentum. So waiting for some additional PA/confirmation for a move in the opposite direction is often the best thing to do. This is, and always has been, Sonicdeejays advice. You are looking to make a counter-trend entry, and so it is wise to look for signs that the trend momentum may have given up the ghost. The Scout in this situation has nothing to do with using the Dragon to locate an EP area because PA can be far removed from the Dragon. The anticipation is the next move will be back towards, and maybe thru, the Dragon. So, you see that the idea behind this Scout is in the anticipation that PA has run its course in the current direction, anticipation based on a number of factors which can include PVSRA. This Scout situation is very high risk compared to the Classic trade because currently there is no counter-trend momentum to support your counter-trend Scout, and you are guessing the direction of the next momentum will be counter-trend. Well, PVSRA is not exactly guessing, but we have seen time and again, what looked like a pending reversal ends up being followed by trend continuation. Increasing skill with PVSRA can reduce this risk, but it is still a high risk trade whenever an entry is made against the prevailing trend. Scout During Classic Earlier in this thread there is mention of Classic re-entry trades, trades added to the Classic that is green, following a pullback and when PA then proceeds on past the previous high or low. However, the top/bottom of the pullback is the optimum place to add to the Classic. With the advent of PVSRA - helping us to be more sure of the status of the MMs (bulls or bears) - we can have more confidence to add to the Classic during retraces instead of waiting for PA to proceed on past the previous high or low. Such an addition to the Classic trade is another type of Scout situation, which for all intents and purposes also replaces the term re-entry trade. There will be times, after a Classic trade has begun, that PA will put the Classic trade into the red. This can be a reversal and the trade should be closed if you see it that way. Or, it can simply be the Robber Bank MMs Stop Hunting, in which case another Scout trade situation presents itself. But remember, adding to a Classic trade that is in the red is not recommended, no matter how tempting it looks. Conclusion A Scout before a Classic is higher risk than a Scout during a Classic. A Scout during a Classic that puts the Classic red (a Stop Hunt?) is also high risk, and not recommended. A Scout during a Classic, on retraces while the trade is green, is the safest application of the Scout. -tah
Posted on: Sun, 17 Aug 2014 03:43:12 +0000
Trending Topics
Recently Viewed Topics
© 2015