The Perfect Storm

Timing is everything. A few days ago, I was getting out of the elevator at about 9:30 am with a guy who’s been doing some work in my apartment - only of the renovation kind mind you. He was telling me how he wanted to visit New York one day when we bumped into my neighbours – an old married couple who are always so sweet. They go everywhere together. One look at the lady, her eyes and jaw wide open, told me that irreparable damage to my chaste, good Catholic girl reputation was done.

Embarrassed, I rushed out the door, not bothering to explain my chastity a la Bill Clinton with the “I did not have…” sort of speech. Margaret Thatcher said it best: “Being powerful is like being a lady. If you have to tell people you are, you aren't.”

Still, the incident got me thinking. Surely, this could happen in our trading as well.

What if we set out to create the perfect storm with all of our trades?

In my desperate search for a new silk little black dress, I’ve convinced myself that maybe Bergdorf Goodman isn’t even the right place to look. We’ve got to go couture!

So what would a couturiere be looking for to move probability in her favour? We must basically look to create the best fit possible with our forex trading strategy and this involves alignment of at least 60% of the following elements - the more alignment, the better, obviously.


1. Psychology. Are we psychologically fit and in the right frame of mind to trade that day?

2. Pattern. Do we see some sort of fashionable pattern in the market – such as a triangle, rectangle, or the coveted H & S and even more coveted reverse H & S?

3. Divergence. Is there divergence that supports the pattern we see?

4. Trend. Has a trend been developing in the longer term? If we’re trading with the trend, then the pattern and divergence we see must be in alignment with the prevailing trend.

5. Sentiment. Who has been guarding what positions? Even though we as retail traders do not have transparent information on who exactly is long or short what, we can nonetheless take an educated guess with a look at the candlesticks. Hint: timing is everything and the major market indices give us a good indication of market sentiment as well.

6. News Announcements. Is there an impending news announcement that would help drive the market in our direction?

7. Confirmation. Are the last few candles confirming our setup? This is often overlooked. We become so distracted by looking at past trends that we forget to look at the future and the last few candles are definitely a good indication of the future if taken in context with the other aforementioned criteria.


So, when the market opens this week, I’ll be turning over a new leaf – with a new age, a new couture creation, and greater self-confidence.

I reckon that’s what they mean when they say older and wiser.

Reckon – my new favourite word?