A Few Precautions and Suggestions
A Few Precautions and Suggestions
In many respects, using the MAC technique for day trading is similar to
riding a bicycle. A book can only go so far in explaining to you how the job is
done. Thereafter you must take the initiative, you must have the discipline,
and you must take the risk in order to make the techВэnique work for you. What I
have provided in this chapter, although I have tried to be as specific as
possible, is merely the framework of a technique which combines science and
skill. If you are a serious day trader who is looking for numerous
opportunities to buy up support and sell at resistance, I know of few
techniques which can provide the many opportunities that this one can. Yes,
there will be days and there will be times when this technique does not afford
you an opportunity, and there will be losing days. However, if you are
consistent with it, you will find that there are many opportunities within
trends to establish positions using the channel and to exit these positions
profitably.
Because the channel technique is not totally mechanical and involves
some degree of subjectivity, I urge you to work with it before impleВэmenting it
so that you may adapt it to your particular needs and your particular style of
trading to this method.
Using the Channel Technique with
Other Methods
The MAC technique is especially easy to use in conjunction with some of
the other day-trading methods I've discussed in this book. SpecifiВэcally, the
channel technique works extremely well once another trading system or method
has triggered an entry on the long or short side. Say, for example, that either
of the two gap-trading techniques triggers a buy. In this case you would use
the MAC as a method of buying on reacВэtions to the longer support level of the
channel.
Assume that S&P futures give a gap buy signal early in the day.
Assume also that the buy signal entry price is 399.50. Typically, the first
response of the market would be to push through 399.50 rather quickly, possibly
moving to as high as 400+. Thereafter, the market would typicalВэly (but not
always) retrace its gains perhaps moving back down to 399.60 or lower. It may
be that 399.60 is the bottom of the MAC and, therefore, a place to go long
following the initial burst of activity to the up side.
I have provided three concise illustrations of this situation in Figures
7-9, 7-10, and 7-11. Examine them carefully and note my comments. As you can
see, the MAC is a very versatile technique which easily lends itself to use
with other day-trading systems and methods. No matter how you decide to use the
MAC, remember that within the rules I've given you this is strictly a
day-trading method.
Evaluation of the MAC
The MAC is an excellent method for determining support, resistance, and
trend. It will work well on intraday data as well as on daily, weekly, and
monthly data. It does, however, require some judgment inasmuch as it is not a
totally mechanical method.
Category: Day trader
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